Bullion metals end mixed

Gold ends lower for eighth straight day but silver shines

Gold prices ended lower for the eighth straight day on Wednesday, 04 March, 2009. Prices continued to fall as traders turned their attention to equity today reducing the appeal of the precious metals.

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, Comex Gold for April delivery fell $6.9 (0.8%) to close at $906.7 an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 6%. 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 2.5%.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped significantly (12.3%) since then.

On Wednesday, Comex silver futures for March delivery rose 18.5 cents (1.6%) to end at $12.9 an ounce. Prices fell to $12.43 earlier during the day. In February, 2009, silver had rose 4.3% after climbing 14% in January. Year to date, silver has climbed 17.1% this year. For 2008, silver had lost 24%.

In the currency market today, the dollar remained a bit weak against its counterparts. The dollar index ended lower by 0.6%.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.

US stocks started and ended the day on a strong note on Tuesday, 04 March, 2009, though it was off its session highs. The rally was induced by some sort of strength witnessed in the overseas market overnight. China's stimulus package to bolster its economy is perhaps being witnessed as a way to save the world from the ongoing recession. Economic reports disappointed as expected at Wall Street today. But stocks seem to have discounted these things already.

Last year, the weakening dollar and higher global demand for raw materials had led to records for commodities including gold. Gold reached a record in March 2008 as a U.S. housing slump and credit crisis spurred the Federal Reserve to slash borrowing costs. In the last move, the Federal Reserve has cuts its target bank lending rate to 0.25% from 5.25% in September, 2007. The Fed did it in nine steps.

Prior to 2008, 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%.

At the MCX, gold prices for April delivery closed lower by Rs 277 (1.8%) at Rs 14,991 per 10 grams. Prices rose to a high of Rs 15,285 per 10 grams and fell to a low of Rs 14,966 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed Rs 70 (0.3%) lower at Rs 21,852/Kg. Prices opened at Rs 21,976/kg and fell to a low of Rs 21,737/Kg during the day's trading.