Silver prices rise but gold drops for the third consecutive day
Bullion metals ended mixed today, Thursday, January 17, 2008. While silver rose, gold continued to drop for the third consecutive day. Gold Prices eased today further after crude prices also slipped.
Gold generally moves in the opposite direction of the U.S. currency. Gold, as a dollar-denominated commodity, suffers from dollar strength.
Comex Gold for February delivery today fell $1.5 (0.2%) to close at $880.5 an ounce on the New York Mercantile Exchange. They rose to an intraday high of $891.5 an ounce earlier and also fell to an intraday low of $875.2. On Tuesday, 15 January, during intraday trading prices rose as high as $916.1/ounce, but the slipped. This year, prices have gained 5% till date.
Gold has traditionally been used as a safe-haven asset against rising inflation. Investor sentiments are boosted by the fact that gold and silver are alternate sources of good investment in the face of declining dollar and rising energy prices. Rising crude increases inflationary pressures and vice versa. On the other hand strong dollar reduces the appeal of the metal as alternate source of investment.
Before these three days, gold had struck consecutive record highs for six consecutive sessions. Prices closed above the $900 mark for the first time on Monday, 14 January, 2008. Since then it has dropped by more than $20.
Comex Silver futures for March delivery rose 11.5cents (0.7%) to $16.01 an ounce. Silver has gained 7.2% in 2008. The metal had climbed 15.5% in FY 2007. The metal also has gained for seven straight years.
Gold witnessed the greatest annual gain in twenty eight years by gaining $200/ounce (31%) in FY 2007. In 2006, silver had jumped 46% while gold gained 23%.
In the currency market today, the dollar index, which tracks the value of the greenback against a basket of other major currencies, fell 0.2% to 76.1.
In the energy market today, crude oil fell to a four-week low on recession concerns and oil closed lower by 71 cents today at $90.13 barrel.
Today, Federal Reserve Chairman, Ben Bernanke reiterated that the outlook for growth in 2008 "has worsened" and "the downside risks to growth have become more pronounced." Last week he had hinted that more interest rate cuts are on the way to help the situation from worsening further.
Gold had climbed 31% in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record.
At the MCX, gold prices for February delivery closed lower by Rs 20 (0.17%) at Rs 11,162 per 10 grams. Prices rose to a high of Rs 11,263 per 10 grams and fell to a low of Rs 11,119 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed Rs 82 (0.4%) higher at Rs 20,636/Kg. Prices opened at Rs 20,551/kg and rose to a high of Rs 20,824/Kg during the day's trading.
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