Gold’s dazzling rally halts, tumbles 5%

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New Delhi: Gold prices tumbled nearly 5% to below $1,140 an ounce on Friday, marking a one-week low, as investors, fearing debt default in Dubai, sought safety in dollars and cash. State-backed Dubai World has $59 billion of liabilities — a big chunk of the Emirate's total debt of $80 billion.

Silver hit a two-week low of $17.66 an ounce, while platinum and palladium touched one-week lows of $1,418.50 and $351 an ounce, respectively. Spot gold briefly hit a low of $1,136.80 a troy ounce, the lowest since November 16 and was bid at $1,160.00 an ounce at 1219 GMT from $1,192.60 on Thursday, when it hit $1,194.90 — a record high.

Gold prices in Delhi spot markets slumped by almost Rs 320 per 10 grams to close at Rs 17,850 per 10 grams in a day of intense volatility. The metal had slumped to around Rs 17,600 in intra-day trade. Silver prices in local spot markets dropped to Rs 28,000, marking a dip of around Rs 950 per kilogram.

Impact of the Dubai crisis also hit other commodities: lead was quoted at $2,305/2,310 from a close of $2,340 on Thursday, while its earlier drop was of 8% to $2,145, its lowest since early October. Nickel dropped to a four-month low of $15,751 a tonne, before recovering slightly at $16,125. Copper, for three-month delivery on the London Metal Exchange, traded at $6,770.5 a tonne, down almost 0.74% from the previous close. Agriculture commodities also bore the brunt of Dubai defaults as the dollar saw a gain. ICE March raw sugar futures fell 0.27 cent to 22.05 cents per pound Daniel Major, a metals analyst at RBS Global Banking & Markets, said, “It's mainly driven by this news out of Dubai (which) has had a large impact on risk appetite and has resulted in a sharply stronger dollar”.