Precious metals shed more glitter

Yellow metal drops for second consecutive day

Bullion metal prices ended lower for the second straight day on Monday, 07 December, 2009. Prices continued to drop after dropping for first time in last Friday after a long time. Prices fell today as the dollar headed up earlier during the day before Fed Chairman Ben Bernanke gave his speech.

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 $1,160 an ounce, lower by $8.8 (0.8%) an ounce on the New York Mercantile Exchange. During intra day trading, gold fell to a low of $1136.3. Last week, gold shed 0.5%.

Gold ended November, 2009 higher by 13%. Before that, for the third quarter it ended higher by 8.7%. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year. On a year to date basis, gold price is higher by 31.8%.

On Monday, December Comex silver futures ended lower by 27 cents (1.5%) at $18.225 an ounce. Last week, silver ended higher by 1%.

In the currency market on Monday, the dollar headed strongly up initially. But then, the dollar erased its gains against the euro after Bernanke's speech. It earlier rose to the highest levels versus the euro in more than a month, extending Friday's rally in the wake of a surprisingly strong U.S. employment report for November. The dollar index, which measures the strength of the dollar against a basket of six other currencies, then fell by almost 0.4%. Year to date, the dollar index has dropped by almost 7%.

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

At the MCX, gold prices for February delivery closed lower by Rs 110 (0.62%) at Rs 17,584 per ten grams. Prices rose to a high of Rs 17,650 per 10 grams and fell to a low of Rs 17,535 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 23 (0.08%) lower at Rs 28