Precious metals continue to shed glaze

Mixed job report fails to offset dollar's surge

Precious metal prices continued with their downslide on Friday, 05 February 2010. Prices fell as the dollar extended a rally buoyed by mixed job report in US.

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 Friday, gold for April delivery ended at $1,052.8 an ounce, lower by $10.2 (0.9%) an ounce on the New York Mercantile Exchange. For the week, gold lost 1.9%. For January 2010, gold lost 1.2%. Year to date, gold has shed 3.9%.

On Friday, March Comex silver futures ended lower by 52 cents (3.5%) at $14.83 an ounce. For the week, silver ended lower by 7.8%. In January 2010, silver shed 3.9%. Year to date in FY 2010, silver has dropped by almost 11.7%.

In the currency market on Friday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose by almost 0.4%.

Among economic data expected for the day, The Labor Department in US reported on Friday, 05 February 2010, that the unemployment rate in US fell to 9.7% in January 2010 from 10% in December 2009. This marked the lowest unemployment rate since August 2009. The unemployment rate had peaked at 10.1% in October 2009.

On the other hand, nonfarm payroll employment declined again, whereas market had been forecasting a small increase. As per the report, the U.S. economy lost 20,000 nonfarm jobs in January. Market was expecting an addition of around 15,000 jobs in January.

Precious metal prices started slipping since past couple of weeks due to impending worries from China front where tightening monetary policies are bothering investors due to shaky demand of metals in coming months.

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.