Bullion metals turn extremely pale

Prices witness highest one-day losses in three months

Bullion metal prices ended substantially lower on Tuesday, 27 July 2010 at Comex. Prices dropped as sellers resorted to selling of precious metals. A lower consumer confidence report did nothing to make investors return to bullion metals as alternate investment.



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 Tuesday, gold for August delivery ended at $1,158 an ounce, lower by $25.1 (2.1%) on the New York Mercantile Exchange. This was gold's biggest one-day drop in past three months. Prices closed below the $1,200 mark for eighth consecutive session. It also marks a decrease of 8% from gold's record high of $1,258.30 set 18 June. Last week, gold ended lower by a mere 0.1%.

Gold ended the month of June higher by 2.5%. For the second quarter, gold ended up by 12%, its seventh consecutive quarterly gain. For the first quarter of this year, gold rose by 1.7%. On a year to date basis, gold is higher by 6.9%.

On Tuesday, September Comex silver futures ended lower by 57 cents (3.2%) at $17.63 an ounce. Last week, silver ended lower by 0.6%. For the second quarter, silver ended higher by 3.1%. For the first quarter of this year, silver rose by 3%. On a year to date basis, silver is higher by 4.1%.

The Conference Board in US reported on Tuesday, 27 July 2010 that consumer confidence fell in July on concerns about jobs and business conditions. July's consumer confidence index fell to 50.4, the lowest level since February, from an upwardly revised 54.3 in June.

Consumers' view of current conditions and short-term outlook fell in July. The present-situation index fell to 26.1 in July, the lowest level since March, from 26.8 in June. Those saying present business conditions are "bad" rose to 43.6% in July from 41% in June, while those saying jobs are "hard to get" rose to 45.8% from 43.5%.

The expectations index fell to 66.6 in July, hitting the lowest level since February, from 72.7 in June. Those expecting business conditions in six months to be "worse" rose to 15.7% in July from 13.9% in June, while those expecting more jobs fell to 14.3% from 16.2%, and those expected a decrease of income rose to 17.5% from 16.8%.

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 390 (2.15%) at Rs 17,754 per ten grams. Prices rose to a high of Rs 18,153 per 10 grams and fell to a low of Rs 17,736 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed Rs 711 (2.4%) lower at Rs 28,458/Kg. Prices opened at Rs 29,149/kg and fell to a low of Rs 28,393/Kg during the day's trading.