Bullions continue to turn pale

Gold settles at fresh six-month low levels as dollar heads up

Bullion metal prices ended lower on Thursday, 14 February 2013. Prices fell due to a strong dollar and as traders assessed a statement from the Group of Seven nations on foreign-exchange rates. The weakness in gold also comes amid the Lunar New Year holidays in China this week, a period of family get-togethers on the mainland when demand for physical gold tends to decline.

Gold for April delivery ended lower by $9.6 or 0.6%, to settle at $1,635.5 an ounce on the Comex division of the New York Mercantile Exchange on Thursday. It was lowest level for gold in almost six months time.

March silver ended lower by 52 cents (1.7%) at $30.35 an ounce on Thursday.

Losses in gold and silver intensified after a report citing a draft statement, said finance ministers and central banks from the Group of 20 nations will repeat a vow to refrain from competitive devaluation and to monitor possible monetary-policy spillover.

Meanwhile, the World Gold Council reported on Thursday that central banks bought 534.6 tons of gold last year, the most since 1964, as global gold demand reached a record level. Gold demand in value terms also reached a record in 2012.

HSBC on Wednesday boosted their 2013 silver target to $33 from $32 an ounce and their 2014 target to $31 from $28 an ounce. Traders see four factors driving higher prices in 2013: higher industrial demand, steady demand from investors for hard assets, strong purchases of coin and bars and a bottoming out of jewelry demand.

The Group of 20 nations meets in Moscow on Friday and Saturday. A main topic will likely be currency values as many industrialized nations have in recent months, or longer, worked to devalue their currencies to revive their economic growth. The Group of Seven nations on Tuesday issued a statement that said their central banks were not attempting to devalue their currencies, but instead trying to boost their economic growth rates. The G-7 nations also said they will not target specific currency exchange rates. The statement was meant to head off growing concerns that currency wars could break out if there is not some form of agreement reached soon by the major nations, regarding currency exchange rates. The G-7 statement was mildly supportive to the precious metals and it implies that the major world economies are not going to do much to stop the devaluation of their currencies.

The Lunar New Year celebration is occurring this week in Asia. China is on holiday all week for the celebration. That is slightly bearish for the gold market as it is limiting physical buying interest from the Chinese this week. However, there were late reports Tuesday that physical demand for gold in Asia may be picking up as the week progresses.

The dollar index, which weighs the strength of the dollar against a basket of six other currencies rose by 0.4% on Thursday.

Economic data for the day showed today that the number of people who applied last week for new jobless benefits fell sharply, but it's unclear whether the unexpected drop mainly reflects an improved labor market or the effects of a blizzard that battered the Northeast. The Labor Department reported that the initial jobless claims sank 27,000 to a seasonally adjusted 341,000 in the week ended 9 February 2013. Market had expected a much smaller drop to 360,000 from a revised 368,000 in the prior week.

At the MCX, gold prices for April delivery closed lower by Rs 91 (0.3%) at Rs 30,463 per ten grams. Prices rose to a high of Rs 30,610 per 10 grams and fell to a low of Rs 30,452 per 10 grams during the day's trading.

At the MCX, silver prices for March delivery closed lower by Rs 812 (1.4%) at Rs 56,630/Kg. Prices opened at Rs 57,469/kg and fell to a low of Rs 56,550/Kg during the day's trading.

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