Gold prices ended sharply lower by Rs 440 per ten grams to Rs 11,685 (from the previous closing level of Rs 12,125) on the bullion market on lack of demand at higher levels along with fresh stockists offerings on the back of lower overseas advices. Silver also declined sharply in line with gold prices. Silver ready (.999 fineness) slipped by Rs 985 per kilo to end at Rs 22,640 as against Rs 23,625 previously.

Meanwhile, oil also fell toward $100 (dropped $1.55 to $100.03 a barrel) on Tuesday, extending losses from the previous session as a strengthening US dollar triggered a wide sell-off across commodity markets. Analysts feel, the dollar was helped by Swiss bank UBS and Germany’s Deutsche Bank announcement of $23 billion in additional writedowns, which showed that credit problems are not limited to the United States.

Funds sold out of oil positions in droves on Monday to take profits at the end of the first quarter, as a week of heavy fighting in Iraq’s oil port city of Basra ended and officials forecast a recovery in crude exports from the hub within a day. But with the start of a new quarter, funds will likely be viewing further price pullbacks as buying opportunities, especially after freeing up a significant amount of cash via recent commodity liquidation.

Average oil futures prices surged to record highs during the first quarter of 2008, with the average for US crude up 68 per cent on a year-earlier and 8 percent higher than the preceding quarter.

“People are looking at US gasoline demand and how stocks can be accumulated before the summer driving season. It depends on the US economy,” said Tetsu Emori, a Tokyo-based fund manager at Astmax Co Ltd.

Is it an early sign of inflation numbers going down or is it? Meanwhile analysts feel that cut in import duties (alone) is not good enough to tackle rising inflation numbers. Long-term strategy of boosting domestic food supplies may have more effect.