Mixed end for precious metals

Gold rises marginally but silver slips

Yellow metal prices ended little higher on Wednesday, 17 February 2010. Gold gave up earlier losses and ended higher for the day despite a strong dollar. Silver fell 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 Wednesday, gold for April delivery ended at $1,120.1 an ounce, higher by $0.30 (0.02%) an ounce on the New York Mercantile Exchange. Last week, gold gained 4%. For January 2010, gold lost 1.2%. Year to date, gold is higher by 2.5%.

On Wednesday, March Comex silver futures ended lower by 5 cents (0.3%) at $16.098 an ounce. Last week, silver ended higher by 4.1%. In January 2010, silver shed 3.9%. Year to date in FY 2010, silver has dropped by almost 0.9%.

In the currency market on Wednesday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose by almost 1%.

Among economic report scheduled for the day, the Labor Department in US reported on Wednesday, 17 February 2010 that the prices of goods imported into the United States jumped 1.4% in January, the sixth straight increase. The increase was led by higher prices for oil and gas.

The World Gold Council reported on Wednesday that demand for gold climbed 2.6% in the fourth quarter from the prior three-month period. Gold consumption increased to 819.7 metric tons with prices averaging 15% more on a quarter-to-quarter basis. Conversely, demand for gold fell 24% in the fourth quarter from a year ago, and was down 11% in 2009 versus the year earlier.

Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.

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. 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.

At the MCX, gold prices for April delivery closed higher by Rs 25 (0.14%) at Rs 16,756 per ten grams. Prices rose to a high of Rs 16,850 per 10 grams and fell to a low of Rs 16,664 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 151 (0.6%) lower at Rs 25,047/Kg. Prices opened at Rs 25,090/kg and fell to a low of Rs 24,770/Kg during the day's trading.