Gold ends little higher

Recessionary thoughts increases appeal of yellow metal

Bullion metal prices ended little higher on Wednesday, 01 April, 2009. Recessionary constraints increased the appeal of the precious metal. The weak dollar was also the main reason for precious metals ending higher.

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 $3.5 (0.4%) to close at $926.1 an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 3.5%. Year to date, gold prices are higher by 12.4%.

For the month of March, gold fell 2.1%, down for the first month in five. But the metal gained 4.3% in the first quarter. Before March, for the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (7.9%) since then.

On Wednesday, Comex silver futures for May delivery fell marginally by 1 cent to end at $12.975an ounce. In February, 2009, silver had rose 4.3% after climbing 14% in January. Year to date, silver has climbed 19.6% this year. For 2008, silver had lost 24%.

The ADP employment report said on Wednesday, 01 April, 2009 that The U.S. labor market worsened again in March, as private-sector firms cut 742,000 jobs. It was the largest job loss recorded by ADP in its nine-year history.

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

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 June delivery closed higher by Rs 24 (0.16%) at Rs 15,088 per 10 grams. Prices rose to a high of Rs 15,195 per 10 grams and fell to a low of Rs 14,986 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed Rs 120 (0.54%) lower at Rs 21,735/Kg. Prices opened at Rs 21,800/kg and fell to a low of Rs 21,581/Kg during the day's trading.