Bullions witness a mixed finish

Gold drops but silver ekes out small gains

Yellow metal prices ended lower for sixth straight session on Thursday, 29 December 2011 at Comex. Better than expected economic data at Wall Street lifted US stocks on Thursday thereby reducing the appeal of yellow metals against an alternate investment. Silver managed to eke out a small gain after staying weak earlier during the day.



Gold for February delivery ended lower by $23.2 or 1.5%, to end at $1,540.9 an ounce on the Comex division of the New York Mercantile Exchange on Thursday. Prices have shed 4.8% in past five sessions. Last week, the yellow metal rose 0.5%.

On Thursday, silver prices for March delivery rose $0.08 or 0.3% to end at $27.32. Last week, silver prices dropped 1.9%.

Prices were pressured by declining interest from speculators who have increasingly chosen to cash out their gold/silver investments or place reserves in more traditional sectors, such as a strengthening U.S. equities market.

Domestic data at Wall Street showed that the number of people who filed requests for jobless benefits (initial claims) rose last week for the first time in a month but remained at a level indicating modest improvement in the U.S. labor market. First-time applications for unemployment compensation climbed 15,000 to a seasonally adjusted 381,000 in the week ended 24 December 2011. Claims from two weeks ago were revised up to 366,000 from 364,000. Market had projected claims for the latest week would rise to 374,000.

The average of new claims filed over the past four weeks, meanwhile, dropped by 5,750 to 375,000, which is the lowest level since June 2008. The monthly average is seen as a more accurate gauge of labor trends because it reduces volatility in the week-to-week data.

Jobless claims have gradually fallen from the 2011 peak of 478,000 in late April, with much of the decline coming in the past few months. Claims are now well below 400,000, a level historically associated with more hiring and fewer layoffs.

Among other data scheduled, the National Association of Realtors reported the number of Americans signing contracts to purchase previously owned homes climbed a far-more-than forecast 7.3% in November. Data showed that its pending sales index rose to 100.1 in November from a revised 93.3 in October, and it's now 5.9% above its year-ago level.

The Chicago PMI for December dipped 0.1 point to 62.5, a better-than-forecast reading and the 27th month of expansion. Market had anticipated a 60.0 reading for the closely followed gauge tracking the sentiment of purchasing managers. Readings above 50 indicate expansion.

In the currency market on Thursday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies fell by almost 0.05%.

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.

At the MCX, gold prices for February delivery closed lower by Rs 445 (1.63%) at Rs 26,836 per ten grams. Prices rose to a high of Rs 27,218 per 10 grams and fell to a low of Rs 26,517 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed lower by Rs 418 (0.82%) at Rs 50,218/Kg. Prices opened at Rs 50,505/kg and fell to a low of Rs 48,562/Kg during the day's trading.