The yellow metal suffers its first weekly decline in one month
Bullion metals ended marginally higher on Friday, 18 January, 2008. Gold rose on speculation that a U.S. recession will boost demand for the precious metal as an alternative investment. Silver also gained.
Gold generally moves in the opposite direction of the U.S. currency. Gold, as a dollar-denominated commodity, suffers from dollar strength.
Comex Gold for February delivery rose $1.1 (0.1%) to close at $881.6 an ounce on the New York Mercantile Exchange. On Tuesday, 15 January, during intraday trading prices rose as high as $916.1/ounce, but the slipped. This year, prices have gained 5% till date. But on a weekly basis, gold suffered a loss of 1.8%.
Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices. Rising crude increases inflationary pressures and vice versa. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.
Before this week, gold had struck consecutive record highs for six consecutive sessions. Prices closed above the $900 mark for the first time on Monday, 14 January, 2008. Since then it has dropped by more than $22.
Comex Silver futures for March delivery rose 21.5cents (1.3%) to $16.225 an ounce. Silver has gained 8.5% in 2008. The metal had climbed 15.5% in FY 2007. The metal also has gained for seven straight years.
Gold witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.