Mixed end for precious metals

Gold drops for first time in five days

Yellow metal prices fell for the first time in five days on Thursday, 07 January 2010. Chances of China raising interest rate pushed dollar higher thereby reducing the appeal of precious metal as an alternate investment. But silver gained for the day.

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 Thursday, gold for February delivery ended at $1,133.7 an ounce, lower by $2.8 (0.2%) an ounce on the New York Mercantile Exchange. It had added 4% in past four sessions.

Gold ended FY 2009 higher by 24%. In 2008, gold prices ended higher by 5.5%.

Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end. Gold shed more than 7% in December.

On Thursday, March Comex silver futures ended higher by 16 cents (0.9%) at $18.34 an ounce.

Silver futures had ended 2009 up 50%. Silver futures had hit a low at $10.42 on 15 January, 2009 and hit a high at $19.30 per ounce on 2 December, 2009. Like gold, silver also ended lower than its all time high level.

In the currency market on Thursday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose by almost 0.6%. China's central bank said on Wednesday that it aimed to keep inflation in check in 2010 while maintaining its pro-growth monetary policy as the world's third-largest economy recovers from the financial crisis.

Among economic data for the day, The Labor Department in US reported on Thursday, 07 January 2010 that the number of people filing initial claims for state unemployment benefits was essentially unchanged in the week of 2 January 2010 rising by just 1,000 to a seasonally adjusted 434,000.

The four-week average of initial claims – a favorite, because it smoothes out one-time distortions caused by bad weather, holidays and strikes - fell by 10,250 to 450,250. That's the lowest since September 2008, just before the recession began. Compared with a year ago, initial claims are down 15%, while state continuing claims are up 13%. The data showed that over the past several months, fewer people are losing their jobs than were six months ago, but once a job is lost, it's very hard to find another one.

At the MCX, gold prices for February delivery closed lower by Rs 38 (0.22%) at Rs 16,827 per ten grams. Prices rose to a high of Rs 16,915 per 10 grams and fell to a low of Rs 16,785 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 147 (0.52%) higher at Rs 27,960/Kg. Prices opened at Rs 27,864/kg and rose to a high of Rs 28,020/Kg during the day's trading.