Precious metals continue to drop

Yellow metal drops to lowest level in two weeks

Precious metal prices fell substantially at USA on Monday, 06 July, 2009. Slipping crude price and strong dollar snatched away quite some shine from precious metals by decreasing their appeal as a hedge against inflation. Gold fell to its lowest levels in two weeks.

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 Monday, gold for August delivery ended at $924.3, lower by $6.7 (0.7%) an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 1.1%. Year to date, gold prices are higher by 4.6%.

For the month of June, 2009, gold ended down by 5.4%. Gold had ended the month of May higher by 9.8%. It was the highest monthly gain registered by gold in six months. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (11%) since then.

On Monday, Comex silver futures for September delivery lost 17 cents (1.3%) at $13.238 an ounce.

Silver ended 13% down for the month of June, 2009. For the month of May, silver gained 26.6%. It was the biggest monthly gain for silver in more than two decades. For second quarter, silver rose 4.5%. Year to date, silver has climbed 17.3% this year. For 2008, silver had lost 24%.

In the currency market on Monday, the dollar index, a six-currency measure of the greenback's value rose considerably. The index rose on speculation that leaders from the Group of Eight nations will make efforts later this week to shore up the greenback. The dollar index dropped by 6.4% in the second quarter and is higher by almost 0.5% on a y-t-d basis.

Crude prices traded substantially lower today due to the strong dollar. Crude oil prices traded lower by 4% around $64/barrel.

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

At the MCX, gold prices for August delivery closed higher by Rs 55 (0.44%) at Rs 14,519 per 10 grams. Prices rose to a high of Rs 14,560 per 10 grams and fell to a low of Rs 14,408 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 156 (0.72%) higher at Rs 21,820/Kg. Prices opened at Rs 21,505/kg and rose to a high of Rs 21,899/Kg during the day's trading.