Precious metals shed gains

Prices drop for first time in four days

After three sessions of rise, precious metals ended lower on Thursday, 27 May 2010 at Comex. Prices fell despite a weak dollar. Gold prices struggled to retain its gains and inched lower finally. Prices fell as tension once again inched up regarding eurozone's problems.

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 August delivery ended at $1,214.4 an ounce, lower by $0.90 (0.1%) an ounce on the New York Mercantile Exchange. Gold had closed above $1,200 for first time in a week yesterday. Gold for June delivery had settled above $1,200 in early December, only to pull back to $1,172 area and dip as much as the $1,050 vicinity in early February.

Last week, gold ended lower by 4.2%. This month, till date gold is trading higher by 2.9%. For the month of April, gold ended higher by 6%. 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 10.4%.

On Thursday, July Comex silver futures ended lower by 16 cents (0.8%) at $18.46 an ounce. Last week, silver ended lower by 8.1%. For the month of April, silver ended higher by 4.1%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 7.8%.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against a basket of six other currencies fell by 1%.

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 154 (0.83%) at Rs 18,388 per ten grams. Prices rose to a high of Rs 18,537 per 10 grams and fell to a low of Rs 18,361 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed Rs 28 (0.09%) higher at Rs 29,308/Kg. Prices opened at Rs 29,350/kg and rose to a high of Rs 29,461/Kg during the day's trading.