Precious metals drop for second straight day

Prices witness weekly losses in a long time

Precious metal prices dropped for second straight day on Friday, 22 October 2010 at Comex. Prices erased earlier gains and fell as the dollar strengthened. With Friday's loss, gold registered first weekly loss in six weeks.



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. But bullion metals have registered increase in prices despite strong dollar in recent times and vice versa.

On Friday, gold for December delivery ended at $1,325.1 an ounce, lower by $0.50 (0.01%) on the New York Mercantile Exchange. For the week, gold ended lower by 3.4%.

Gold ended the month of September 2010 and the third quarter higher by 5%. It was eighth consecutive quarterly gain for gold. For the second quarter, gold ended up by 12%. For the first quarter of this year, gold rose by 1.7%. On a year to date basis, gold is higher by 21%.

On Friday, December Comex silver futures ended lower by 2 cents (0.1%) at $23.12. For the week, silver ended lower by 4.8%. For the month of September, silver ended higher by 12%. For the third quarter, silver gained nearly 18%. 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 38%.

In the currency market on Friday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies rose marginally by almost 0.04%. The stronger greenback, was pushed up earlier this week by comments from U.S. Treasury Secretary Timothy Geithner and a surprise interest-rate hike in China. Traders also waited to hear from South Korea, where finance ministers from the Group of 20 nations gathered.

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.