Gold and silver prices drop as dollar strengthens and crude weakens
Gold and silver prices dropped today at New York. The drop for gold prices was the highest since August, 2007. A drop in crude oil and a partial strengthening of the dollar against other currencies hurt gold's appeal as an inflation hedge.
In recent days, the weakening of dollar had continued to affect the price of the metal. Investor sentiments were boosted by the fact that gold and silver were alternate sources of good investment in the face of declining dollar and rising energy prices. Till last week, gold had rallied six straight weeks to the highest in 27 years as the dollar tumbled to a record against the euro.
Gold for December delivery fell $17.80 (2.4%) to close at $736.3 an ounce on the New York Mercantile Exchange today, 2 October 2007, 2007. The contract had touched a low of $730.8 during the day but rebounded back. Yesterday, gold had climbed to an intraday high of $755.7. This was the highest intra day price seen since the last 28 years.
Silver futures for December delivery dropped 40.5 cents (2.9%) to $13.45 an ounce. The metal has climbed 4% this year.
Gold prices have jumped 15% during the third quarter and it is the most since 1999. The yellow metal has climbed 15% this year.
The U.S. currency today rose after touching all-time lows in the previous eight sessions. The currency ignored a couple of weak economic reports. The Dollar Index, which tracks the performance of the dollar against a basket of other currencies, moved up by 0.5% to 78.28. Previous to today, dollar had dropped more than 7% against the euro this year. Crude prices continued to trade below $80/barrel.
As per Nymex data on last Friday, Gold warehouse inventories rose by 79,316 troy ounces to stand at 7.1 million troy ounces but Silver supplies fell to 132.6 million troy ounces, down 1.4 million troy ounces.