Precious metals shed some glitter

Prices drop as dollar heads up

Precious metal prices ended lower on Thursday, 22 April 2010 at Comex. Strong dollar pushed bullion metal prices lower after two consecutive days of rise. But better than expected earning reports in most cases pointed towards higher demand for metals in coming months and restricted the drop.

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 Thursday, gold for June delivery ended at $1,142.9 an ounce, lower by $5.9 (0.5%) an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 2.5%. For the month of March, gold slid 0.4%. For the first quarter of this year, gold rose by 1.7%, its sixth quarterly rise. On a year to date basis, gold is higher by 4.3%.

On Thursday, May Comex silver futures ended lower by 6.9 cents (0.4%) at $18.009 an ounce. Last week, silver lost 3.7%. For the month of March, silver ended higher by 5%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 5.9%.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against basket of six other currencies rose by 0.5%. The greenback rose for the sixth straight session against a basket of major currencies, including the euro, after the European Union said that Greece's budget deficit was wider than forecast.

Among economic reports expected for the day, The Labor Department in US reported on Thursday, 22 April 2010 that U.S. wholesale prices rose by a seasonally adjusted 0.7% in March 2010, reversing a drop in February. The producer price index has risen by 6% in the past year, led by a 23% rise in energy prices. It's the largest year-over-year gain since September 2008.

Separately, the Labor Department in US reported on Thursday, 22 April 2010 that the number of people filing an initial claim for unemployment benefits declined by 24,000 for the week ended 16 April week to a seasonally adjusted 456,000, the first drop in three weeks. Initial claims are down 27% from a year ago.

Elsewhere, The National Association of Realtors in US reported on Thursday, 22 April 2010 that existing homes rose 6.8% in March to a seasonally adjusted annual rate of 5.35 million from a downwardly revised 5.01 million in February. The figure was more than the expected 5.29 million.

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 June delivery closed lower by Rs 57 (0.34%) at Rs 16,671 per ten grams. Prices rose to a high of Rs 16,744 per 10 grams and fell to a low of Rs 16,575 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed Rs 119 (0.43%) lower at Rs 27,412/Kg. Prices opened at Rs 27,465/kg and fell to a low of Rs 27,187/Kg during the day's trading.