Precious metals gain 9% for the week

Gold and silver drop on the last day of the week

After four days of successive rise, bullion metals fell on Friday, 12 December, 2008. Prices fell as the bailout news in the auto industry hit a block as the senators did not vote for the $14 billion package at Washington.

On Friday, Comex Gold for February delivery fell $6.1 (0.8%) to close at $820.1 an ounce on the New York Mercantile Exchange. For the week, gold gained 9%. On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (19.3%) since then.

For the month of November, gold prices ended higher by 14%. Prior to this, for the month of October, gold had ended lower by 18%. It was the biggest percentage loss for gold since February, 1983.

This year, gold prices have lost 1.9% till date. Futures have averaged $878 in 2008. The dollar index has gained 9% this year. For the third quarter ended September, 2008, gold prices ended lower by 5.1%. It was the first quarterly loss for the yellow metal since the second quarter in FY 2007. Prior to that, the yellow metal ended second quarter with a marginal gain of 0.7%. For first quarter prices gained 10.7%.

On Friday, Comex silver futures for December delivery fell 20 cents (2%) to $10.23 an ounce. For the week, silver gained 80 cents (9%). For the month of November, silver prices had gained 5%. Till date, silver has lost 30.4% this year.

For the month of October, silver had slipped by 20%. Silver had ended month and quarter of September 2008 with a loss of 10%. 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.

As per the latest developments in the auto deal workout, the Senate refused to provide U.S. automakers with $14 billion in bailout money.

Earlier this year, the weakening dollar and higher global demand for raw materials had led to records this year for commodities including gold. Gold reached a record in March as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the latest move, the Federal Reserve has cuts its target bank lending rate to 1% from 5.25% in September, 2007. The Fed did it in eight steps.

It was reported earlier last week that gold production in South Africa fell by 14% year-on-year in October. The country's total mining production, however, rose by 3.5% year-on-year in October, with non-gold output rising 6.5%.

Gold had witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record. Silver had climbed 16% in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.