Mixed finish for bullions

Gold ends with little losses while silver ends with little gains

Bullion metal prices ended mixed on Monday, 13 May 2013. Comex gold prices ended the U.S. day session with slight losses on Monday, on some mild selling pressure from sharp losses suffered late last week. The key outside markets were also in a bearish posture for the precious metals markets on Monday, as the U.S. dollar index was firmer and crude oil prices were lower.

Gold for June delivery ended lower by $2.3 (0.2%) at $1,434.3 an ounce on the Comex division of the New York Mercantile Exchange on Monday.

July silver ended higher by $0.04 cents (0.2%) at $23.7 an ounce on Monday.

Investors considered the possible curtailing of monetary-policy stimulus by the Fed. The central bank's easy monetary policy tends to raise the risk of inflation, as well as put pressure on the dollar. Gold is seen as a hedge against inflation and as a dollar-denominated commodity, can benefit from a weaker dollar.

China on Monday reported its industrial production did improve during April, but still came in slightly below trade expectations. Industrial production in China came in at up 9.3%, on an annualized basis, in April. The market expected up 9.5%. This news was slightly bearish for the metals on Monday.

Reports from India Monday said demand for physical gold was unimpressive as a major festival approaches. Retailers and analysts said consumer demand for gold is rising about 10% to 15%, when sales usually rise 40% to 50% during the Akshaya Trithiya festival season. The weak Indian rupee currency and a rebound in gold prices from the April low were blamed for the lackluster demand for gold in India. There were also reports Monday that India has banned the purchase of foreign gold on credit, in order to curb speculation.

Reviewing today's economic data at Wall Street, business inventories growth was flat for a second consecutive month in March. The consensus expected business inventories to increase 0.3%. Inventory growth from manufacturers (0.0%) and merchant wholesalers (0.4%) was known prior to the release. The only new information was that retailer inventories declined 0.5% in March after increasing 0.2% in February.

Retail sales increased 0.1% in April after declining 0.5% in March. The consensus expected retail sales to decline 0.3%.

The April employment report showed a 0.3% decline in aggregate wages. The increase in sales was a result of consumers reducing their savings rate. That may work in the short-run, but consumers are expected eventually to increase their savings rate back to 2012 levels. Unless income growth accelerates, retail sales growth will likely decelerate and possibly contract in the long-run.

In the currency market, the dollar index, which weighs the strength of the dollar against a basket of six other currencies, rose by 0.15% on Monday.

At the MCX, gold prices for June delivery closed lower by Rs 145 (0.43%) at Rs 26,854 per ten grams. Prices rose to a high of Rs 26,888 per 10 grams and fell to a low of Rs 26,676 per 10 grams during the day's trading.

At the MCX, silver prices for July delivery closed lower by Rs 166 (0.4%) at Rs 45,118/Kg. Prices opened at Rs 44,901/kg and fell to a low of Rs 44,861/Kg during the day's trading.

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