Bullion metals continue to drop

Gold and silver give up 6% and 12% respectively for the week

Bullion metal prices registered substantial losses for the sixth straight day on Friday, 08 August, 2008 as the dollar strengthened against most currencies. Gold and silver prices also registered sufficient losses for the week. Silver prices also fell for the day.

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. On the other hand, a lower dollar pushes up precious metal prices as their demand lessens as it becomes cheaper for traders holding other currencies.

Comex Gold for December delivery fell $13.1 (1.3%) to close at $864.8 ounce on the New York Mercantile Exchange. It fell to an intra day low price of $858. For the week, it ended lower by 5.8%. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped since then.

This year, gold prices have gained 3.7% till date against a 8% drop for the dollar against the euro. Gold ended July, 2008 lower by $11 (1.1%). The yellow metal ended second quarter with a marginal gain of 0.7%. It ended June, 2008 with a gain of 4.1%. In May, it ended with a gain of higher by $22.5 (2.5%). Before May, in April, prices closed lower by 6.3%. For first quarter prices gained 10.7%. In January, prices gained 11%, the highest monthly gain since April 2006. For February, it gained 6%. But in March, prices succumbed and fell by 5.5%.

On Friday, Comex silver futures for September delivery fell 92.7 cents (5.7%) to $15.33 an ounce. Silver has gained 4.3% in 2008 till date. For the week it lost 12.5%. It ended July 2008 with a gain of 3%. For the second quarter, it had gained a paltry 1.4%. Silver had gained 16% in Q1. The metal also had gained for seven straight years.

At the currency markets on Friday, the dollar rallied against the euro. The dollar surged against major counterparts, mostly as concerns about the eurozone economy increased following the European Central Bank's decision to leave interest rates unchanged on Thursday. The greenback garnered attention following cautions that the European economy would weaken. As tighter credit and higher costs hit the continent, growth prospects become dimmed, making it less likely the ECB will hike interest rates. The dollar index traded 1.6% higher.