Bullion metals turn pale again

Prices end lower as dollar spikes to ten month high against euro

Precious metal prices ended lower on Wednesday, 24 March 2010. Prices slipped as the dollar headed up strongly to its highest level in ten months following the resurface of Greece and Portugal's fiscal problems pressuring the euro.

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 $1,088.8 an ounce, lower by $14.9 (1.4%) an ounce on the New York Mercantile Exchange. For most part of the day, gold remained a little below $1,100 due to strong demand. Last week, gold gained 0.5%. In FY 2010, gold touched a high of $1,154 in January.

On Wednesday, May Comex silver futures ended lower by 38 cents (2.3%) at $16.64 an ounce. Last week, silver ended almost unchanged against last Friday's closing of $17.04.

In the currency market on Wednesday, the dollar index, which measures the strength of the dollar against basket of six other currencies rose by 1.2% earlier in the day and settled for a 0.8% gain.

Portugal became the latest source of concern out of the European Union joining Greece in its fiscal problems. On Wednesday, Fitch Ratings downgraded Portugal one notch to AA- on concerns about its budget, and warned further cuts could happen.

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 May delivery closed lower by Rs 150 (0.91%) at Rs 16,295 per ten grams. Prices rose to a high of Rs 16,461 per 10 grams and fell to a low of Rs 16,275 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed Rs 386 (1.45%) lower at Rs 26,230/Kg. Prices opened at Rs 26,563/kg and fell to a low of Rs 26,194/Kg during the day's trading.