Prices drop in tandem with equities and oil
Precious metals ended lower on mixed on Wednesday, 19 May at
Comex. Prices fell as traders anticipated that recent rally in precious
metals last week was overdone. Prices also fell in tandem with US
equities and other commodities.
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 Wednesday, gold for June delivery ended at $1,193.1 an
ounce, lower by $21.5 (1.8%) an ounce on the New York Mercantile
Exchange. Today's session at Wall Street was clouded by Germany's
temporary ban on the naked short-selling of several derivatives and
instruments. A sliding U.S. stock market and further losses for oil
took a toll on gold as investors sold bullion to cover margin calls in
stocks and other commodities. 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.
Last week, gold ended higher by 1.5%. 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 8.7%.
On Wednesday, July Comex silver futures ended lower by 79
cents (4.2%) at $18.08 an ounce. Last week, silver ended higher by
4.1%. 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 2.6%.
Today's trading once again saw some renewed strength in the
euro. Though the euro made its best single-session gain against the
greenback in nearly one year, the lack of any new developments in
Europe led many to believe that the bounce was little more than a
relief rally that squeezed short sellers. In turn, stocks showed little
sustained reaction to the euro's climb.
Among economic data for the day, The Labor Department in US
reported on Wednesday, 19 May 2010 that consumer prices in the U.S.
fell 0.1% on a seasonally adjusted basis in April as energy, housing,
auto and apparel prices declined. It was the first decline in the
consumer price index since March 2009. The consumer price index is up
2.2% in the past year. The core CPI, which excludes food and energy
prices to get a better view of underlying inflation, was unchanged in
April, lowering the year-over-year increase in core inflation to 0.9%,
the lowest rate since January 1966.
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 higher by Rs
10 (0.05%) at Rs 18,018 per ten grams. Prices rose to a high of Rs
18,291 per 10 grams and fell to a low of Rs 17,976 per 10 grams during
the day's trading.
At the MCX, silver prices for July delivery closed Rs 493
(1.7%) lower at Rs 28,762/Kg. Prices opened at Rs 29,220/kg and fell to
a low of Rs 28,590/Kg during the day's trading.