Bullion metals turn little pale

Weaker than expected economic reports take some glaze away from precious metals

Bullion metal ended lower on Tuesday, 14 April, 2009. Prices fell as retail sales and producer price data checked in weaker than expected reducing the appeal of the precious metals as a hedge against inflation.

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.

On Tuesday, Comex Gold for June delivery fell $3.8 (0.4%) to close at $892 an ounce on the New York Mercantile Exchange. Last week, gold ended lower by 1.5%. Year to date, gold prices are higher by 0.7%.

For the month of March, gold fell 2.1%, down for the first month in five. But the metal gained 4.3% in the first quarter. Before March, for the month of February, gold ended higher by 7.4%. For January, 2009, gold had gained 3.9%.

On 17 March, 2008 prices had skyrocketed to a high of $1,034/ounce. But prices have dropped somewhat (15.5%) since then.

On Tuesday, Comex silver futures for May delivery fell by 5 cents at $12.765 an ounce. Year to date, silver has climbed 12. 3% this year. For 2008, silver had lost 24%.

The Commerce Department reported today that U.S. retail sales dropped a seasonally adjusted 1.1% in March after two months of gains had boosted hopes of a rebound in consumer spending. Sales fell in March for almost every type of store except the necessities of food and drugs.

In a separate report, the Labor Department said producer prices fell 1.2% in March, much more than the 0.5% decline expected. Core prices - which exclude food and energy were unchanged. Producer prices are down 3.5% in the past year, the largest decline in wholesale prices since 1950.

In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.