Bullions continue with their downward slide

Prices continue to turn pale even on Monday after their last week's huge drop on Friday

Precious metals continued their downward slide following their last Friday's huge drop and ended substantially lower once again on Monday, 26 September 2011 at Comex. Prices fell as investors hedged against a possible global liquidity crunch and reacted to increases in margin requirements for gold.



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.

Gold for December delivery fell $45 or 2.7%, to end at $1,594.8 an ounce on the Comex division of the New York Mercantile Exchange on Monday. Last week, gold lost 9.7%, including Friday's 5.7% drop, the largest one day percentage fall in a very long time. It rose by $201 or 12% during the month of August.

On Monday, silver prices for December delivery fell $0.13 (0.4%) to end at $29.98. Last Friday, silver lost 18% in on single day. For the month of August, silver gained 4.1%.

US stocks started the session with healthy gains as participants responded to renewed buying interest in Europe, where there has been speculation that officials are preparing to take new measures in addressing the fiscal and financial problems that have plagued the region for so long.

In the currency market on Monday, the dollar index, which measures the strength of the dollar against a basket of six other currencies, was trading modestly lower by 0.12%.

Among economic data expected for the day, investors grappled with news from the government that sales of new U.S. homes fell 2.3% in August to an annual rate of 295,000, marking the fourth decline in a row. Sales last month dropped to the lowest level since February. After a peak at 316,000 in April, new-home sales have gradually declined. The report came in better than expected, however.

At the MCX, gold prices for October delivery closed lower by Rs 1,029 (3.8%) at Rs 25,687 per ten grams. Prices rose to a high of Rs 26,700 per 10 grams and fell to a low of Rs 24,992 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed lower by Rs 2,149 (3.99%) at Rs 51,577/Kg. Prices opened at Rs 52,700/kg and fell to a low of Rs 45,824/Kg during the day's trading.