Bullion metals ended mixed on Friday, 22 February, 2008 due to some profit taking issues. Silver rose but gold dropped. But at the end, gold registered good gains for the week. 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 April delivery fell $1.4 (0.12%) to close at $947.8 an ounce on the New York Mercantile Exchange. On Thursday, 21 February, prices hit a high of $958.4. This year, prices have gained 13.5% till date. In January, prices gained 11%, the highest monthly gain since April 2006.
For the week ending on Friday, gold gained $41.5 (4.6%). Prices increased due to the slumping dollar and supply issues at South Africa. Gold prices rise with falling dollar as inflationary concerns boosts the metal's appeal as an inflation hedge.
Comex Silver futures for March rose by 9 cents (0.5%) to $18.04 an ounce. Silver has gained 18.8% in 2008. The metal had climbed 16% in FY 2007. The metal also has gained for seven straight years. In January this year itself, prices climbed 14%.
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 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%.
At the MCX, gold prices for April delivery closed higher by Rs 9 (0.07%) at Rs 12,084 per 10 grams. Prices rose to a high of Rs 12,134 per 10 grams and fell to a low of Rs 11,970 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed Rs 146 (0.6%) higher at Rs 22,951/Kg. Prices opened at Rs 22,870/kg and went to a high of Rs 23,150/Kg during the day's trading.