Precious metals drop for third straight day

Gold and silver continue to drop as dollar surges

Precious metal prices ended lower for third straight day on Monday, 21 September, 2009. Prices fell as dollar firmed up ahead of Federal Reserve's two day meet starting tomorrow.

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 September delivery ended at $1003.7, lower by $5.5 (0.5%) an ounce on the New York Mercantile Exchange. During intra day trading, it fell to a low of $998. Last week, gold ended higher by 0.4%. Year to date, gold prices are higher by 15%.

Gold ended August, 2009 higher by 0.2%. Before this, 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 (2.8%) since then.

On Monday, Comex silver futures for December delivery fell 18.5 cents (1.1%) to $16.88 an ounce. Last week, silver ended higher by 2.2%.

Silver ended 7.1% higher for August, 2009. For second quarter, silver rose 4.5%. Year to date, silver has climbed 47.4% this year. For 2008, silver had lost 24%.

In the currency market on Monday, the dollar index, which measures the strength of dollar against a basket of other currencies, rose by 0.5%.

Federal Reserve starts its two day meet on monetary policy tomorrow. The FOMC will release on Wednesday a statement on monetary policy that may clarify how the central bank plans to unwind its quantitative easing programs.

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