Precious metals drop further

Prices turn paler as dollar recovers from fresh lows

Precious metal prices ended lower on Monday, 26 October, 2009. Prices fell due to the rebounding dollar.

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 December delivery ended at $1,042.8, lower by $13.6 (1.3%) an ounce on the New York Mercantile Exchange. Earlier during the day, gold rose to a high of $1,068. Last week gold ended higher by 0.5%. Last week, gold had registered record highs quite a few times reaching an all time high of $1071. Year to date, gold prices are higher by 18.3%.

Gold ended September, 2009 higher by 5.9%. For the third quarter it ended higher by 8.7%. 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 Monday, December Comex silver futures ended lower 63 cents (3.5%) at $17.095 an ounce. Last week, silver ended higher by 1.7%.

Silver ended 11.8% higher for September, 2009. Year to date, silver has climbed 56.3% this year. For 2008, silver had lost 24%.

In the currency market on Monday, the dollar index, which calculates the strength of the dollar against a basket of six other currencies rose by almost 0.6%. Last week, it had dropped to fourteen month lows.

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

At the MCX, gold prices for December delivery closed lower by Rs 88 (0.55%) at Rs 15,891 per 10 grams. Prices rose to a high of Rs 16,014 per 10 grams and fell to a low of Rs 15,860 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed Rs 597 (2.2%) lower at Rs 26,844/Kg. Prices opened at Rs 27,385/kg and fell to a low of Rs 26,7256/Kg during the day's trading.