Bullions end modestly lower

They lose their safe haven appeal after German government bond auction failed

Precious metals ended modestly lower on Wednesday, 23 November 2011 at Comex. Concerns regarding Germany's failed bond auction jittered investors. But prices ended well up from the daily low on Wednesday. Bargain hunters once again stepped in to buy the dip in prices. However, it was another “risk-off” day in the market place on Wednesday, and that had the raw commodity sector, including precious metals, under selling pressure. The dollar headed up firmly.



Gold for December delivery ended lower by $6.5 or 0.4%, to end at $1,695.9 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. Last week, the yellow metal lost 3.5%. For the month of October, gold gained 6.3%. It registered a rise of 8% for the third quarter ending September.

On Wednesday, silver prices for December delivery fell $1.07 or 3.2% to end at $31.88. Last week, silver lost 4.9%. For the month of October, silver gained 14%. It registered a drop of 14% for the third quarter ending September.

The market place got another negative jolt on Wednesday when a German government bond auction turned in disastrous results. This rattled already shaky world stock markets and once again called into question the survivability of the Euro currency. The European Union debt crisis has now spread from the smaller, periphery countries to the major core countries of the EU.

In the currency market on Wednesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies ended higher by 1.1%.

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.

Wall Street offered little reaction to domestic data, which showed consumer spending rising less than projected as well as orders for durable goods falling in October.

Other reports had more first-time applicants than estimated filing for jobless benefits last week, although the overall count remained under 400,000 for a third week, while U.S. consumer confidence for November ticked up to its highest level since June, albeit at a relatively low level.

At the MCX, gold prices for December delivery closed lower by Rs 19 (0.06%) at Rs 28,780 per ten grams. Prices rose to a high of Rs 28,823 per 10 grams and fell to a low of Rs 28,490 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed lower by Rs 1,206 (2.1%) at Rs 55,846/Kg. Prices opened at Rs 56,840/kg and fell to a low of Rs 54,703/Kg during the day's trading.