Bullion metals shine

Weak dollar increase precious metals' appeal

After dropping for two straight days, precious metals shone again today, Wednesday, 11 March, 2009. Prices rose today due to the weak dollar which increased the appeal of precious metals as a hedge against inflation.

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 rose $14.8 (1.7%) to close at $910.7 an ounce on the New York Mercantile Exchange. It fell to an intra day low of $892.6 earlier during the day. 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 3.2%.

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

On Wednesday, Comex silver futures for March delivery rose 26 cents (2.1%) to end at $12.8 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 12.4% this year. For 2008, silver had lost 24%.

In the currency market on Wednesday, the dollar fell against most of the other global currencies. The dollar index, which measures the value of dollar against a weighted basket of six currencies, was down 0.8% to 88.008.

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