Prices drop as dollar heads up
Precious metals ended substantially lower on Thursday, 13 May
at Comex. Prices dropped due to profit booking after yellow metal
touched record highs couple of times in the past few days. The strong
dollar also took some shine away from precious metals.
Generally, a stronger dollar pressures demand for
dollar-denominated commodities, such as crude oil and gold, which
become more expensive for holders of other currencies and also vice
versa.
On Thursday, gold for June delivery ended at $1,229.2 an
ounce, lower by $13.9 (1.1%) an ounce on the New York Mercantile
Exchange. Yesterday, prices rose to a high of $1,249.3 during intra day
trading. Gold for June delivery had settled above $1,200 in early
December, only to pull back to $1,172 area and dip as much as the
$1,050 vicinity in early February.
Gold opened in the red on Thursday but pared losses as the
session progressed, even changing paths, and touching a fresh record in
midday trading, but such gains were short lived as the euro remained
under pressure against the dollar.
Last week, gold ended higher by 2.5%. For the month of April,
gold ended higher by 6%. For the first quarter of this year, gold rose
by 1.7%, its sixth quarterly rise. On a year to date basis, gold is
higher by 11.8%.
On Thursday, July Comex silver futures ended lower by 16
cents (0.8%) at $19.49 an ounce. Last week, silver ended lower by 0.9%.
For the month of April, silver ended higher by 4.1%. For the first
quarter of this year, silver rose by 3%. On a year to date basis,
silver is higher by 10.2%.
In the currency market today, the euro dropped once again
against the dollar. The dollar index, which measures the strength of
the dollar against a basket of six other currencies rose by 0.6%.
Among economic data for the day, The Labor Department in US
reported on Thursday, 13 May 2010 that the number of people applying
for unemployment benefits essentially held steady at 444,000 in the
latest week.
As per the report, claims fell by 4,000 in the week ended 8
May but the data was revised up by 4,000 for the prior week to a
seasonally adjusted 448,000. Initial claims have fallen just 2.2% since
the beginning of the year, but they are 29% lower compared with a year
ago. The four-week average of initial claims, a better gauge of
employment trends than the volatile weekly number, dropped by 9,000 to
450,500.
Gold had ended FY 2009 higher by 24%. Silver futures had
ended 2009 up 50%. The dollar index had lost 4.2% against its
counterparts last year.
Last year, after hitting a low at $807.30 per ounce on 15
January 2009, gold futures rallied almost 51% to hit an all-time high
at $1217.40 per ounce during early December of 2009 but fell from those
levels at the end. Silver futures had hit a low at $10.42 on 15 January
2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold,
silver also ended lower than its all time high level.
At the MCX, gold prices for June delivery closed lower by Rs
199 (1.09%) at Rs 18,030 per ten grams. Prices rose to a high of Rs
18,201 per 10 grams and fell to a low of Rs 17,966 per 10 grams during
the day's trading.
At the MCX, silver prices for July delivery closed Rs 234
(0.78%) lower at Rs 29,708/Kg. Prices opened at Rs 29,850/kg and fell
to a low of Rs 29,522/Kg during the day's trading.