Precious metals witness mixed finish

Gold ends lower following Fed's comments

Bullion metal prices ended mixed on Tuesday, 03 April 2012 at Comex. Comex gold futures ended the U.S. day session lower while silver prices advanced. Comex gold futures prices traded sharply lower in afternoon trading on Tuesday, in a strongly bearish response to the afternoon release of the minutes of the last Federal Open Market Committee meeting of the U.S. Federal Reserve. The key “outside markets” were also bearish for the precious metals on Tuesday, as the U.S. dollar index was higher and crude oil prices were lower. Silver traded lower alongside gold earlier but changed course in the mid morning hours.



Gold for June delivery ended lower by $7.7 or 0.5%, to end at $1,672 an ounce on the Comex division of the New York Mercantile Exchange on Tuesday. The metal had spent most part of the earlier week in the red. That brought first quarterly gains of gold to 6.7%. For March 2012, gold declined 2.3%.

On Tuesday, silver prices for May delivery ended higher by $0.17 or 0.5% at $33.27. Silver gained 6.5% during February 2012. On the first quarter, silver jumped 16%, which follows three quarters of losses in 2011. For the month of March, silver declined 6%.

A sleepy market place got a bucket of cold water thrown in its face in afternoon trading on Tuesday when the latest FOMC minutes were released and hinted further that any additional quantitative easing from the U.S. central bank is not likely. Some FOMC members even pondered at what point to begin to look at raising U.S. interest rates. That news sent the U.S. dollar index solidly higher and many commodity futures markets, including gold lower.

Part of gold's strength in recent years has been expectations of more inflation and continued monetary stimulus by the Fed.

In the currency market on Tuesday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies rose by almost 0.7%. It was essentially trading flat for the entire morning and rose only after Fed's comments.

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.

Additionally, reports this week say India's gold imports have declined by around two-thirds from this time last year, due to a gold retailers' strike to protest additional government taxes on gold. The gold retailers are continuing to protest and are now asking the Indian government to at least reduce the new tax increase on the yellow metal. This situation has been a bearish drag on gold the past few weeks.

At Wall Street, The Commerce Department in US reported that orders for goods produced in U.S. factories rose 1.3% in February, 2012. Market had expected orders to climb 1.5%. Factory orders were revised down to a 1.1% decline in January from a prior estimate of a 1.0% drop.

At the MCX, gold prices for June delivery closed lower by Rs 112 (0.39%) at Rs 28,445 per ten grams. Prices rose to a high of Rs 28,579 per 10 grams and fell to a low of Rs 28,420 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed lower by Rs 28 (0.04%) at Rs 57,567/Kg. Prices opened at Rs 57,550/kg and fell to a low of Rs 57,103/Kg during the day's trading.