Generally, a stronger dollar pressures demand for dollar-denominated commodities, such as crude oil and gold, which become more expensive for holders of other currencies and also vice versa.
On Thursday, gold for December delivery ended at $1,125.7 an ounce, higher by $5.2 (0.5%) an ounce on the New York Mercantile Exchange. Gold prices have dropped almost $100 (8%) in the past four sessions. Last week, gold shed 0.5%.
Gold ended November, 2009 higher by 13%. Before that, for the third quarter it ended higher by 8.7%. For the second quarter, gold ended higher by 0.5%. The metal had gained 4.3% in the first quarter of this year. On a year to date basis, gold price is higher by 28.5%.
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On Thursday, December Comex silver futures ended higher by 0.15 cents (0.1%) at $17.173 an ounce. Last week, silver ended higher by 1%.
Among economic data today, The Labor Department in US reported on Thursday, 10 December, 2009 that the number of people filing claims for state unemployment benefits rose by 17,000 to a seasonally adjusted 474,000 in the week ending 5 December, 2009. Market had expected initial claims to fall to about 450,000. The total number of people claiming benefits of any kind topped 10 million. First-time claims, which measure new layoffs, rose for the first time in six weeks in the week after Thanksgiving.
Another report showed that the trade deficit in US for October totaled $32.9 billion, which is less than the $36.8 billion deficit that had been widely expected. It is also an improvement from the upwardly revised $35.7 billion deficit that was registered in September. Meanwhile, the November Treasury Budget was expected to show a shortfall of $131.6 billion, but it was less steep at $120.3 billion.
In the currency market on Thursday, the dollar stayed relatively steady against its counterparts. But the euro climbed up more than 0.1% against the dollar.
In 2008, gold prices ended higher by 5.5%. The dollar index had gained 12% that year.
At the MCX, gold prices for February delivery closed lower by Rs 11 (0.06%) at Rs 17,078 per ten grams. Prices rose to a high of Rs 17,163 per 10 grams and fell to a low of Rs 17,025 per 10 grams during the day's trading.
At the MCX, silver prices for March delivery closed Rs 215 (0.78%) lower at Rs 27,174/Kg. Prices opened at Rs 27,359/kg and fell to a low of Rs 27,057/Kg during the day's trading.
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