Bullions turn pale

Prices drop as consumer confidence data reduces their appeal

Precious metals ended lower on Tuesday, 27 December 2011 at Comex. Prices dropped despite a weak dollar. A better than expected consumer confidence data dulled the appeal of bullions as a safe haven for alternate investment. Comex trading was closed on Monday in observance of the Christmas holiday.

Gold for February delivery ended lower by $10.5 or 0.7%, to end at $1,595.5 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. Last week, the yellow metal rose 0.5%.



On Tuesday, silver prices for March delivery fell $0.34 or 1.2% to end at $28.74. Last week, silver prices dropped 1.9%.

In the currency market on Tuesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies fell by almost 0.3%.

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 bullions have registered increase in prices despite strong dollar in recent times and vice versa.

Data on Wall Street showed on Tuesday a strong consumer confidence reading. The Consumer Confidence Index for December rose to 64.5 from 56.0 in the prior month. It had been expected to improve to just 58.0.

At the MCX, gold prices for February delivery closed lower by Rs 128 (0.5%) at Rs 27,651 per ten grams. Prices rose to a high of Rs 27,744 per 10 grams and fell to a low of Rs 27,534 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed lower by Rs 426 (0.8%) at Rs 52,711/Kg. Prices opened at Rs 53,014/kg and fell to a low of Rs 52,588/Kg during the day's trading.