Bullion metals drop again

Strong rally at Wall Street push precious metals lower

The strong rally at Wall Street pushed bullion metals lower on Tuesday, 10 March, 2009 reducing the appeal of precious metals. Prices fell despite a weak dollar today.

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 Tuesday, Comex Gold for April delivery fell $22.1 (2.3%) to close at $895.9 an ounce on the New York Mercantile Exchange. It fell to an intra day low of $893.5. Last week, the yellow metal remained almost unchanged. For the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%. Year to date, gold prices are higher by 1.5%.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (8.9%) since then.

On Tuesday, Comex silver futures for March delivery fell 40 cents (3%) to end at $12.54 an ounce. Last week, silver rose 1.7%. In February, 2009, silver had rose 4.3% after climbing 14% in January. Year to date, silver has climbed 14.5% this year. For 2008, silver had lost 24%.

In the US market on Tuesday, 10 March, 2009, stocks witnessed a huge one day rally. Though there was no single strong catalyst to fuel this rally, bits and pieces of news in the financial sector is believed to be the main reason for today's rally. But investors seriously doubt whether this rally is just a one day surprise. Other than these, came a few earning guidance reaffirmations. Stocks surged on reports that Citigroup announced that it earned a profit in the first two months of 2009.