Precious metals witness modest losses

Benign economic reports and steady dollar push prices lower

Precious metals ended lower on Thursday, 28 July, 2011 at Comex. Gold prices witnessed marginal drop while silver dropped substantially. Prices turned pale as the dollar headed higher and economic reports came in better than expected. Concerns about lack of a legislative resolution in the U.S. debt-ceiling standoff kept the drop in price under check.

Gold for December delivery fell $1.1 or 0.1%, to end at $1,616.2 an ounce on the Comex division of the New York Mercantile Exchange on Thursday.

On Thursday, silver prices for September delivery fell by $0.77 (1.9%) to end at $39.79. Silver ended the month of June lower by 9% followed by a 21% drop in May.

In the currency market on Thursday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, rose by almost 0.23%.

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.

The Labor Department in US reported on Thursday, 28 July 2011 that the number of people who filed for jobless benefits (initial claims) fell below 400,000 for the first time since early April for the week ended 22 July 2011. The decline was likely aided by workers returning to manufacturing jobs after plants were retooled.

The average of new claims over the past four weeks, meanwhile, declined by 8,500 to 413,750, also the lowest level since April. The monthly average is seen as a more accurate gauge of labor trends because it irons out volatility in the week-to-week data.

Separately, the National Association of Realtor reported that its pending Home Sales Index rose 2.4% in June, the second monthly gain. Contract signings increased in the West and South, but fell in the Northeast and Midwest.

At the MCX, gold prices for June delivery closed lower by Rs 54 (0.23%) at Rs 23,045 per ten grams. Prices rose to a high of Rs 23,147 per 10 grams and fell to a low of Rs 22,930 per 10 grams during the day's trading.

At the MCX, silver prices for September delivery closed lower by Rs 1,085 (1.81%) at Rs 58,630/Kg. Prices opened at Rs 59,670/kg and fell to a low of Rs 58,130/Kg during the day's trading.