Bullions shed glaze

Margin selling, caused by the sharp pullback in equities, pressured bullions today

Precious metals ended lower on Monday, 21 November 2011 at Comex. Margin selling, caused by the sharp pullback in equities, pressured gold and silver today. The strong dollar also pressured overall commodities including bullions.

Gold for December delivery ended lower by $46.5 or 2.7%, to end at $1,678.6 an ounce on the Comex division of the New York Mercantile Exchange on Monday. It fell to a low of $1,670.5 during intra day trading. Gold has been under pressure since past few sessions as many large funds have been selling positions in gold and other commodities. Last week, the yellow metal lost 3.5%. For the month of October, gold gained 6.3%. It registered a rise of 8% for the third quarter ending September.



On Monday, silver prices for December delivery fell $1.3 or 4% to end at $31.12. It fell to a low of $30.65 during intra day trading. Last week, silver lost 4.9%. For the month of October, silver gained 14%. It registered a drop of 14% for the third quarter ending September.

US stocks slumped on Monday ahead of an expected announcement from the congressional supercommittee that it failed to agree on reducing the federal deficit. The apparent stalemate in Washington added to market jitters over Europe's debt crisis, prompting investors to flee equities and flock to perceived safe havens including the U.S. dollar and government bonds.

In the currency market on Monday, the Dollar Index, which weighs the strength of dollar against basket of six other currencies traded higher by 0.3%.

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.

Among the day's economic data expected at Wall Street, sales of existing homes in US rose 1.4% in October to a 4.97 million-unit pace from a slightly downward revision to 4.90 million-unit pace in September. Contract cancellations jumped to 33%.

At the MCX, gold prices for December delivery closed lower by Rs 258 (0.9%) at Rs 28,446 per ten grams. Prices rose to a high of Rs 28,837 per 10 grams and fell to a low of Rs 28,339 per 10 grams during the day's trading.

At the MCX, silver prices for December delivery closed lower by Rs 1,437 (2.6%) at Rs 54,413/Kg. Prices opened at Rs 55,700/kg and fell to a low of Rs 53,880/Kg during the day's trading.