Bullions stay pale

Gold and silver drop as US and global equities rally

Precious metals ended lower once again on Wednesday, 07 September 2011 at Comex. Prices lost their luster after US markets and other global equities rallied for the day. Stocks gained on Wednesday, 07 September 2011 for the first session in four on a report that President Barack Obama will propose a $300 billion package to boost jobs and after Germany's top court ruled it was legal for the country to take part in regional rescue plans.



Gold for December delivery fell $55.7 or 3%, to end at $1,817.6 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. Earlier during the day, prices dropped below $1,800 during intra day trading. Last week, gold rallied 10%. It rose by $201 or 12% during the month of August.

On Wednesday, silver prices for December delivery fell $0.24 (0.6%) to end at $41.63. Last week, silver gained 5.2%. For the month of August, silver gained 4.1%.

The improved tone of today's trade at Wall Street prompted many participants to sell their positions in precious metals.

U.S. stocks on Wednesday finished higher for their first session in four as fears about Europe's debt troubles abated and the Federal Reserve found modest economic expansion. In addition, in an address to a joint session of Congress on Thursday night, Obama plans to propose bolstering employment by injecting more than $300 billion into the economy next year, mainly through tax cuts, infrastructure spending and aid to state and local governments.

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

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.

At the MCX, gold prices for October delivery closed lower by Rs 787 (2.7%) at Rs 27,182 per ten grams. Prices rose to a high of Rs 27,888 per 10 grams and fell to a low of Rs 26,853 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed lower by Rs 239 (0.4%) at Rs 64,366/Kg. Prices opened at Rs 64,205/kg and fell to a low of Rs 62,763/Kg during the day's trading.