Bullion metals pare earlier gains

Prices turn pale as consumer sentiment shows sharp drop

Precious metal prices ended lower on Friday, 12 March, 2010. Prices fell after weak economic data dampened overall sentiment. Earlier in the day prices rose rising on back of higher crude price and higher retail sales data.

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 $1,101.7 an ounce, lower by $6.5 (0.6%) an ounce on the New York Mercantile Exchange. For the week, gold fell 2.4%. In FY 2010, gold touched a high of $1,154 in January.

On Friday, April Comex silver futures ended lower by 9 cents (0.5%) at $17.04 an ounce. For the week, silver ended lower by almost 1.9%.

On Friday, commodities first added to gains after a report that U.S. retail sales rose a better-than-expected 0.3% last month. But a survey from Reuters and the University of Michigan that showed sentiment among consumers unexpectedly fell in March reversed the trend.

A day earlier, on Thursday, gold and other metals advanced after a report from China showed sharper-than-expected increases in consumer and producer prices. That rekindled concern about tighter monetary policy in the country, which many have looked to as a leader in the global economic rebound. China reported that its inflation rate rose to 2.7% in February from 1.5% the prior month.

In the currency market on Friday, the dollar was down for its third straight session as the euro and British pound bounced amid news that industrial production in Europe spiked a sharper-than-expected 1.7% in January. Reports that Goldman Sachs have instructed clients to buy the euro also weighed on the greenback. The dollar index slipped by almost 0.6%.

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.