Bullion metals turn pale

Prices dive lower as dollar heads up

Bullion metal prices ended substantially lower on Monday, 28 June 2010 at Comex. Prices fell as the dollar headed up during the day and as US equities pared their losses that they incurred earlier during the day.



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. Recently, the embattled euro has played stronger role in moving prices rather than dollar fluctuation. Bullion metals have registered increase in prices despite strong dollar in recent times and vice versa.

On Monday, gold for August delivery ended at $1,238.6 an ounce, lower by $17.6 (1.4%) an ounce on the New York Mercantile Exchange. Prices opened higher but swerved in and out of positive territory early in the session. By midmorning, prices had fallen precipitously. Last week, gold ended little lower after witnessing four consecutive weekly gains. Last week, gold ended lower by 0.2%.

Gold for June delivery had settled above $1,200 in early December 2009, only to pull back to $1,172 area and dip as much as the $1,050 vicinity in early February 2010. Gold ended May higher by 3%. 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 12.6%.

On Monday, July Comex silver futures ended lower by 43 cents (2.3%) at $18.67 an ounce. Last week, silver ended lower by 0.4%. For May, silver shed 1.1%. 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 5.1%.

In the currency market on Monday, the dollar index, which measures the strength of the dollar against a basket of six other currencies rose by 0.5%.

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 August delivery closed lower by Rs 108 (0.6%) at Rs 18,706 per ten grams. Prices rose to a high of Rs 18,984 per 10 grams and fell to a low of Rs 18,651 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed Rs 253 (0.84%) lower at Rs 29,551/Kg. Prices opened at Rs 29,850/kg and fell to a low of Rs 29,434/Kg during the day's trading.