Bullion metals shed more luster

Prices drop on back of mixed earnings and economic data

Precious metal prices ended lower on Thursday, 28 January 2010. Prices dropped on the back of mixed earnings and economic data. The relatively steady dollar also pressured prices. Prices are slipping since last couple of days due to impending worries from China front where tightening monetary policies are bothering investors due to shaky demand of metals in coming months.

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 Thursday, gold for April delivery ended at $1,084.8 an ounce, lower by $0.9 (0.08%) an ounce on the New York Mercantile Exchange. Earlier in the day, prices rose marginally. Last week, prices ended lower by 2.4%. Year to date in FY 2010, gold prices are lower by 0.8%.

Last year, after hitting a low at $807.30 per ounce on 15 January 2009, gold futures rallied almost 51% to hit an all-time high at $1217.40 per ounce during early December of 2009 but fell from those levels at the end.

On Thursday, March Comex silver futures ended lower by 23 cents (1.3%) at $16.21 an ounce. Last week, silver ended lower by 8.1%. Year to date in FY 2010, silver has dropped by almost 3.5%.

Silver futures had hit a low at $10.42 on 15 January 2009 and hit a high at $19.30 per ounce on 2 December 2009. Like gold, silver also ended lower than its all time high level.

In the currency market on Thursday, the dollar index, which weighs the strength of dollar against the basket of six other currencies rose marginally after coming off its early highs. The dollar index gained 0.3% for the day.

The Commerce Department in US reported on Thursday, 28 January 2009 that demand for U.S.-made durable goods rose in December for the first time since September, led by strong orders for metals, machinery and capital equipment. As per the report, orders for durable goods increased 0.3% in December to $167.9 billion after a revised 0.4% decline in November. Market was expecting for a much-stronger 1.7% gain in orders in December.

Separately, The Labor Department in US reported on Thursday, 28 January 2009 that first-time filings for state unemployment benefits remained elevated in the latest week as it fell but less than expected. The report stated that for the week ended 16 January 2009, initial claims fell 8,000 to 470,000. Market was expecting claims to fall below 445,000.

Gold had ended FY 2009 higher by 24%. Silver futures had ended 2009 up 50%. The dollar index had lost 4.2% against its counterparts last year.

At the MCX, gold prices for February delivery closed lower by Rs 160 (0.97%) at Rs 16,281 per ten grams. Prices rose to a high of Rs 16,454 per 10 grams and fell to a low of Rs 16,217 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed Rs 566 (2.2%) lower at Rs 25,505/Kg. Prices opened at Rs 26,048/kg and fell to a low of Rs 25,369/Kg during the day's trading.