Sheen’s off gold, but copper conducts just fine
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Crude oil and gold tumbled on Friday, tracking a broader fall in equities, as a fresh setback in talks to find a solution to the US Budget crisis and dismal data about the struggling eurozone prompted investors to retreat from risky assets. Gold stayed just shy of a four-month low and brent crude dropped by more than $1 a barrel intraday. However, copper recovered some gains after hitting a three-week low in the previous session and soyabean rose on technical buying.
A proposal from a Republican leader to extract concessions from US President Barack Obama to head off the fiscal cliff — $600 billion in tax hikes and spending cuts starting January—failed to gather support from his own party on Thursday. This led to uncertainties about possible action by the US to prevent its economy from slipping back into recession, and also jeopardised any raw material demand prospects.
A string of worse-than-expected data from debt-hit eurozone — German consumer confidence crashed to its lowest in more than a year, the UK revised down its growth figures and Sweden, too, trimmed its economic forecasts — just added to the gloom pervading the global economy.
Gold headed for its sharpest weekly loss since June, although the precious metal looks set for a twelfth straight annual rise, thanks to rock-bottom interest rates, concerns over the financial stability of the eurozone and diversification into bullion by central banks around the world.
Bullion was trading at $1,645.17 per ounce by 1100 GMT after hitting a low of $1,635.24, slightly higher than the four-month low of $1,635.09 hit on Thursday.
US February gold futures stayed flat at $1,646.40 an ounce after hitting a low around $1,636, as the euro weakened against the dollar. The euro, which has been tracked closely by gold in recent months, retreated further from an eight-and-a-half-month high hit earlier in the week to stand at $1.3214. Both spot gold and futures are poised for a fourth straight weekly drop.