Bullions drop for third consecutive day

Strength in US dollar and crisis in Greece continue to push them lower

Precious metals ended lower on Tuesday, 01 November 2011 at Comex. Prices were pushed lower due to strength in the US dollar and continuing crisis in Greece. But weaker than expected economic data provided some support to bullions during midday.

Gold for December delivery ended lower by $13.4 or 0.8%, to end at $1,711.8 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. Prices have shed more than 2% in the past three sessions. Last week, gold gained 6.8%. For the month of October, gold gained 6.3%. It registered a rise of 8% for the third quarter ending September.



On Tuesday, silver prices for December delivery dropped $1.62 or 4.7% to end at $32.73. Last week, silver gained 13%. For the month of October, silver gained 14%. It registered a drop of 14% for the third quarter ending September.

In the currency market on Tuesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies rose by almost 0.9%.

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.

Economic data on Tuesday showed that U.S. manufacturing continues to inch out a modest gain, with orders, output and employment each remaining around breakeven. Inventory adjustment drove down the headline release. Headline ISM fell to 50.8 in October from 51.6 in September, but the decline reflected a sharp inventory correction rather than a decline in the overall pace of current production and employment. Market was expecting the figure to rise to 52.1.

At the MCX, gold prices for December delivery closed higher by Rs 182 (0.7%) at Rs 27,525 per ten grams. Prices rose to a high of Rs 27,555 per 10 grams and fell to a low of Rs 27,087 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed lower by Rs 1,114 (1.9%) at Rs 55,313/Kg. Prices opened at Rs 56,500/kg and fell to a low of Rs 53,876/Kg during the day's trading.