Spot gold hit a one-year low of $699 an ounce on Thursday, sharply below its record high of $1,030.80 an ounce on March 17. The collapse of now-defunct Lehman Brothers in early September coincided with the strongest inflows to SPDR Gold Trust, the world's largest gold ETF, since its launch in November 2004. Physical demand coupled with rising investment demand from ETF boosted gold prices. Copper fell over 15% to a three-year low on Friday, following equity markets lower as the market priced in the threat of a global recession and the dollar strengthened supported by the weak demand outlook.
The MCX Copper November contracts were lower by 15% to settle at Rs 197.30 per kg from Rs 232.85 per kg in the previous week. Commodity prices were trading higher in the last few months but suddenly took a u-turn as the global economic picture became gloomy. Downside risks have multiplied as huge entities have succumbed to the credit crisis. Base metals have declined as a gloomy macroeconomic environment has raised concerns over demand.
The MCX Gold December contracts were lower by 10% to settle at Rs 11,442 per 10 gram over the previous week. The average gold price fell in the third quarter to $870.88 an ounce from $896.11 in the second quarter, World Gold Council said. During the quarter, investors bought a total of 145 tonne of gold bullion via gold-backed exchange-traded funds (ETFs), totaling $2.8 billion when converted at the average monthly gold price. The MCX Silver December contracts were lower by 6% to settle at Rs 16,346 per 10 gram over the previous week.
Crude oil futures plummeted 6% on Friday in London after a 1.5 million barrel production cut announced by the Organization of Petroleum Exporting Countries failed to arrest a price selloff.
On MCX, the crude oil December contracts were down by 5% to trade at Rs 3,390 per barrel on Friday over the previous week. The rollback, which takes effect November 1, was insufficient to counter a slowdown in global growth and sluggish oil demand.