Slipping off dizzy highs

DOMESTIC REVIEW/ Bullion

The prices of gold in local markets declined in the week gone by with most stockists selling off their positions following the $9 loss on the February gold futures contract price on the Comex on the New York Mercantile Exchange.

Silver however, made up for the loss in gold, and closed the week higher, despite coming off its high of Rs 12,340 touched on Thursday last.

Internationally, the losses on Thursday were reversed when the February gold futures on the Comex hit a fresh 16-year high yet again, at $458.10 per troy ounce on Friday, up by a per cent from last week.

The rise was propelled by news of the four reported blasts that took place in Madrid, Spain, within trading hours. It was backed by the weak dollar, which plunged to a fresh low against the euro.

The spot London gold fix too closed the week higher at $ 448.65. The employment figures released at the end of the week in the US led to further hammering of the dollar.

The euro then touched record highs against the dollar. In the local market, during the week ended December 4, spot gold (99.50 purity) per 10 gram in Mumbai closed lower from last week's close of Rs 6710 at Rs 6620 on Saturday.

Spot gold (99.90 purity) closed at Rs 6745 on Saturday from last week's Rs 6655. Silver saw a higher demand from the industrial sector and firmed up.

Spot silver (.999) closed sharply higher from last week's close of Rs 12205 to end at Rs 12300 per kilogram.

Analysts indicated gold was currently in a vulnerable period with the outlook is bullish internationally. Most hedge funds and speculators were long on gold, and this was propping up prices. However, commercial traders were facing problems as they were short on gold, analysts said.

This led to speculative interest, causing volatility in markets. A correction could be expected soon, analysts cautioned.

In the Indian futures market, silver gained while gold had a mixed week and ended lower across the exchanges.

Analysts pointed out that activity looked set to pick up in view of the international bullishness.

On the National Commodity Derivatives Exchange (NCDEX), the December contract decreased to Rs 6547 from Rs 6648, with open positions worth 727300 gram and a volume of contract of 257400gram.

The January contract closed lower at Rs 6543 compared with last week's close of Rs 6630. Open interest and volume were at 361900 gram and 87300 gram respectively.

NCDEX December contract closed at Rs 11768 compared with Rs 11627 last week.

The open interest closed at 99930 kilogram while the volume of contract stood at 64880.

The January contract closed at Rs 11730 from Rs 11623 last week, with open interest of 42995 and a volume of 21370.

On the Multi Commodity Exchange of India (MCX) the December gold contract that expired on Friday ended at Rs 6515 from Rs 6655 with an open interest of 166 kg and a volume of 6 kg.

The February contract closed at Rs 6524 from Rs 6636 with an open interest of 3183 kg, and a volume of 2109 kg.

The April contract closed from last week's Rs 6614 at Rs 6525 with open interest of 79 kg and a volume of 6 kg.

The December Gold HNI (High Net Worth Individuals) contract closed at Rs 6578 on Friday from last week's Rs 6639 with open interest at 27 kg.

HNI Silver closed at Rs 11277 from Rs 11671 last week, with an open interest of 2400 kg and a volume of 1050 kg traded.

The December 3 silver contract rose to close at Rs 11836 on Friday from Rs 11724 last week. The open positions stood at 870 kg and the volume of contract was 1320 kg.

The March 2005 contract traded at Rs 11735 from the previous week's close Rs 11619, with 148560 kg positions open, and a volume of 121770 kg.