Bullions pare early gains and end lower

Bullion metal prices ended lower on Wednesday, 17 April 2013. Prices of gold and silver prices failed to stick to initial gains and turned pale as they were hammered by a strong dollar.

Gold for June delivery ended lower by $4.7 (0.3%) at $1,382.7 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. Prices had It touched a low of $1,365 as well as a high of $1,395.20 during intra day trading.

May silver ended lower by $0.32 cents (1.4%) at $23.307 an ounce on Wednesday. Prices had lost 3.3% last week.

The Wednesday afternoon release of the U.S. Federal Reserve's beige book offered no surprises and had little impact on the precious metals or other markets. The beige book said U.S. economic growth continues at a moderate pace, with a pick-up in residential construction.

There were more reports Wednesday of strong demand for physical gold coming out of the Asian region, and especially India. The U.S. Mint on Wednesday said gold coin sales have soared just recently. Many traders are commenting this week that the holders of paper gold (ETFs and futures contracts) have been queued up as major sellers, while the actual holders of physical gold have been lined up as big buyers on the price drop.

Sentiment in gold has suffered after recent cuts to price forecasts for the metal, as well as outflows from gold exchange-traded products. Goldman Sachs and Morgan Stanley have each cut their price forecasts for gold for this year and next. Goldman Sachs on Tuesday also cut its short gold recommendation to $1,400, saying exchange-traded-fund holdings show acceleration in the liquidation of length, which points to a broad-based selloff extending beyond the futures markets, with potential more room to go.

In the currency market, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.9% on Wednesday.

At the MCX, gold prices for June delivery closed lower by Rs 87 (0.33%) at Rs 25,679 per ten grams. Prices rose to a high of Rs 25,900 per 10 grams and fell to a low of Rs 25,435 per 10 grams during the day's trading.

At the MCX, silver prices for May delivery closed lower by Rs 564 (1.3%) at Rs 43,631/Kg. Prices opened at Rs 43,870/kg and fell to a low of Rs 42,838/Kg during the day's trading.

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