Precious metals continue to stay weak

Prices shed recent gains as traders take to profit taking

Precious metal prices ended lower on Tuesday, 29 March 2011 at Comex. Prices dropped as traders took to profit taking after bullion striking all time highs in recent times. A weak consumer confidence report kept price fall under check. A modestly strong dollar also impacted prices. Traders kept keen eyes on continuing violence in Middle East and North Africa and how situation shapes up there.



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 bullion metals have registered increase in prices despite strong dollar in recent times and vice versa.

Gold for June delivery fell $3.8, or 0.3%, to end at $1,417.5 an ounce on the Comex division of the New York Mercantile Exchange. It traded at a low of $1,412.1 during intra day trading. Last week, gold gained 0.7%.

Gold ended the month of February higher by 5.6% following a 6.1% drop in January 2011. For the year of 2010, gold ended higher by 30%, its tenth consecutive yearly gain.

Silver prices for May delivery shed 10 cents (0.3%) to end at $36.99. Last week, silver gained 5.7%. Prices gained more than 20% in February 2011 after shedding 9% this year in January. In FY 2010, silver ended higher by 83.7%.

In the currency market on Tuesday, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.15%. The dollar was boosted by comments from a U.S. Federal Reserve official. Federal Reserve Bank of St. Louis President James Bullard said monetary-policy makers may begin to tighten without waiting for the resolution of global crises.

In other developments across the world, Japan struggled to contain radiation leaks at its crippled Fukushima Daiichi power plant, with plutonium found in soil near the plant.

Among economic data expected for the day, The Conference Board said its consumer-confidence index dropped to 63.4 in March from a revised 72.0 in February, the biggest one-month drop in more than a year.

At the MCX, gold prices for April delivery closed lower by Rs 87 (0.41%) at Rs 20,641 per ten grams. Prices rose to a high of Rs 20,724 per 10 grams and fell to a low of Rs 20,614 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed lower by Rs 261 (0.5%) at Rs 55,165/Kg. Prices opened at Rs 55,310/kg and fell to a low of Rs 54,740/Kg during the day's trading.