Gold and silver prices decline as crude retreats back by more than a dollar
Precious metals ended modestly lower today, 04 January, 2008. Gold and silver prices fell today after oil prices slipped a bit. But dollar continued to weaken against its rivals. It gave a sense of feeling among investors that gold rally in the last couple of days was overdone.
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 fell $3.4 (0.4%) to close at $865.7 an ounce on the New York Mercantile Exchange on Friday, 04 January, 2008. With today's loss, gold has gained 3.3% in 2008.
Prices touched $872 during intraday trading yesterday and finally had closed at $869.3/ounce. Yesterday's closing prices was the highest price after a record $873 that gold hit on 21 January, 1980.
Comex Silver futures for March delivery fell 3.8 cents (0.3%) to $15.462 an ounce. Prices touched 26 year high on 7 November, 2007, after reaching $16.275. Silver has gained 3.6% 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 came off session lows after the dismal payrolls data. But dollar continued to remain under pressure by market expectations that the Federal Reserve will cut interest rates further this month. The dollar index, which tracks the performance of the greenback against a basket of other currencies, fell 0.1% at 75.785.
In the energy market today crude oil fell more than $1 a barrel in New York after a government report showed U.S. unemployment jumped to a two-year high, raising concern of a recession that would curb energy demand. In FY 2007, crude prices gained $57%.
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.
Gold had climbed 31% in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record.
The Fed reduced federal funds rate three times in FY 2007. The current interest rate stands at 4.5%. The Fed also lowered its discount rate twice, the interest it charges on direct loans it makes to banks, and currently it stands at 4.75%. With these interest rate cuts, dollar has been tumbling down. Market anticipates that there will be more rate cut in the coming year.
At the MCX, gold prices for February delivery closed lower by Rs 40 (0.4%) at Rs 10,935 per 10 grams. Prices rose to a high of Rs 11,007 per 10 grams and fell to a low of Rs 10,843 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed Rs 38 (0.19%) lower at Rs 20,015/Kg. Prices opened at Rs 20,050/kg and fell to a low of Rs 19,809/Kg during the day's trading.
Gold is expected to rally to all-time highs in the first quarter in FY 2008 as higher oil prices and a weaker dollar will continue to boost demand.
Precious metals ended modestly lower today, 04 January, 2008. Gold and silver prices fell today after oil prices slipped a bit. But dollar continued to weaken against its rivals. It gave a sense of feeling among investors that gold rally in the last couple of days was overdone.
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 fell $3.4 (0.4%) to close at $865.7 an ounce on the New York Mercantile Exchange on Friday, 04 January, 2008. With today's loss, gold has gained 3.3% in 2008.
Prices touched $872 during intraday trading yesterday and finally had closed at $869.3/ounce. Yesterday's closing prices was the highest price after a record $873 that gold hit on 21 January, 1980.
Comex Silver futures for March delivery fell 3.8 cents (0.3%) to $15.462 an ounce. Prices touched 26 year high on 7 November, 2007, after reaching $16.275. Silver has gained 3.6% 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 came off session lows after the dismal payrolls data. But dollar continued to remain under pressure by market expectations that the Federal Reserve will cut interest rates further this month. The dollar index, which tracks the performance of the greenback against a basket of other currencies, fell 0.1% at 75.785.
In the energy market today crude oil fell more than $1 a barrel in New York after a government report showed U.S. unemployment jumped to a two-year high, raising concern of a recession that would curb energy demand. In FY 2007, crude prices gained $57%.
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.
Gold had climbed 31% in FY 2007 as lower interest rates had sent the dollar tumbling, and crude-oil prices rose to a record.
The Fed reduced federal funds rate three times in FY 2007. The current interest rate stands at 4.5%. The Fed also lowered its discount rate twice, the interest it charges on direct loans it makes to banks, and currently it stands at 4.75%. With these interest rate cuts, dollar has been tumbling down. Market anticipates that there will be more rate cut in the coming year.
At the MCX, gold prices for February delivery closed lower by Rs 40 (0.4%) at Rs 10,935 per 10 grams. Prices rose to a high of Rs 11,007 per 10 grams and fell to a low of Rs 10,843 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed Rs 38 (0.19%) lower at Rs 20,015/Kg. Prices opened at Rs 20,050/kg and fell to a low of Rs 19,809/Kg during the day's trading.
Gold is expected to rally to all-time highs in the first quarter in FY 2008 as higher oil prices and a weaker dollar will continue to boost demand.
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