Base, precious metals set for biggest weekly fall

Written by Commodities Bureau | New Delhi, Oct 24 | Updated: Oct 25 2008, 07:40am hrs
Commodities, led by gold and base metals, are set for one of their biggest weekly decline in decades as fears of global recession widened and the surge in the dollar against the euro and the pound mounted pressure on investors to liquidate their positions.

Gold, the darling of many for its appeal as a safe-haven investment, headed for its steepest weekly decline in more than a quarter-century in London as the rising dollar and plunging equities curbed investor demand for the precious metal. Gold has dropped as much as 13% this week, the biggest drop since the week ended March 14, 1980. The FTSE 100 Index sank 9.1% in London this week and the pound slid the most versus the dollar since 1971 after the UK economy shrank for the first time since 1992.

On Friday, gold for immediate delivery fell as much as $39.04, or 5.4%, to $682.41 an ounce, the lowest in over a year compared with intra-day prices. Gold futures for December dropped $18.70, or 2.6%, to $696 in electronic trading on the Comex division of the New York Mercantile Exchange.

Platinum declined $32.15, or 4%, to $778.35 an ounce, more than a four-year low. Its futures in Tokyo sank 16% this week amid mounting concern that plunging auto sales would cut use of catalytic converters. Among other metals for immediate delivery, silver dropped as much as 99.75 cents, or 10%, to $8.6825 an ounce, the lowest since December 2005.

Palladium slipped $1.25, or 0.7 percent, to $170.75 an ounce. Among base metals, copper and lead were also poised for their biggest weekly decline since the 1980s, while aluminum dropped the most in two years as consumer demand for cars and houses crumbled amid the widening world economic slowdown. Copper, used in wires and pipes, sank 22% this week and lead, a raw material for car batteries, tumbled 20%, Aluminum fell by 12%, the most since May 19, 2006.

Among agriculture commodities, palm oil futures in Kuala Lumpur slumped as much as 12.4% to the lowest in more than three years.