Bullion metals pare earlier gains

Prices drop as dollar heads up

Precious metal prices pared earlier gains and ended lower on Monday, 08 March, 2010. Prices fell as the dollar, which oscillated between gains and losses for the entire day ended higher at the end decreasing precious metal's appeal against an alternate investment. The dollar rose in reaction to Greece's plans to control its deficit and traders' outlook on US economy.

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 April delivery ended at $1,124 an ounce, lower by $11.2 (1%) an ounce on the New York Mercantile Exchange. During intra day trading, gold rose to a high of $1,138 and fell to a low of $1,118.5. Last week, gold gained 1.4%. In FY 2010, gold touched a high of $1,154 in January.

On Monday, May Comex silver futures ended lower by 9 cents (0.6%) at $17.26 an ounce. Last week, silver ended higher by almost 8%.

In the currency market on Monday, the dollar had been down roughly 0.4% at its session low earlier in the day but it ended the day with a 0.4% gain. The dollar earlier fell against the euro after French President Nicolas Sarkozy indicated over the weekend that Greece's euro-zone partners stood ready to provide help if needed to avoid a default.

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.