COMMODITIES-Gold slumps on U.S. debt optimism; supply weighs on oil
NEW YORK, Oct 11 (Reuters) - Gold hit a three-month low on Friday as signs of a possible resolution to the U.S. budget impasse sparked an investor exodus from safe-haven assets, and oil prices fell as tensions over Middle East crude supplies eased. The dollar rose against a basket of major currencies after Republicans in the U.S. Congress met with President Barack Obama on Thursday to offer an extension of the government's borrowing authority for several weeks, temporarily putting off a default. Obama also pushed to reopen government operations that have been shut since Oct. 1. The stronger dollar weighed on gold, oil and a host of commodities priced in the U.S. currency. The Thomson Reuters-Jefferies CRB index, a bellwether for commodities, settled down 0.3 percent. Seven of the 19 markets on the index fell at least 1 percent each. U.S. gold futures fell 2.2 percent in heavy volume, the second largest loss on the CRB after silver's 3 percent drop. Trading of gold futures on New York's COMEX was momentarily halted at 8:42 a.m. EDT (1242 GMT) by "Stop Logic", the mechanism used by exchange operator CME Group to prevent excessive price movements. In the three minutes around the ten-second trading pause, gold prices slid almost $30 an ounce, or about 2 percent, with an unusually heavy turnover at nearly 20,000 contracts - about one-fifth of the market's volume at the time. At the close, the benchmark December contract for COMEX gold was down $28.70 to settle at $1,268.20 an ounce. It earlier fell to $1,242.10, its lowest level since July 10. Part of the decline was in catch up to Thursday's tumble in the spot price of gold. Spot gold fell 1.6 percent in the previous session, while December gold futures only lost 0.8 percent. On Friday afternoon, the spot price was down about 1.5 percent. "If there is a temporary stop-gap measure to avert a disaster of U.S. default, it will lead to gold market going even lower," said Jeffrey Sica, chief investment officer of Sica Wealth, which manages over $1 billion of client assets. The gold holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped 0.2 percent, or 1.80 tonnes, to 896.38 tonnes on Thursday. That marked a fresh four-year low. The ETF, seen as a good measure of gold investor sentiment due to the amount of bullion it holds, has seen outflows of about 400 tonnes this year. Oil's benchmark Brent crude closed down 0.5 percent. It had rallied nearly 3 percent on Thursday, fueled by optimism for a temporary U.S. budget deal which would be positive for oil. Brent settled down 52 cents at $111.28 a barrel after the International Energy Agency said non-OPEC supply would rise by an average of 1.7 million barrels per day (bpd) in 2014, the highest annual growth since the 1970s. U.S. crude ended down 99 cents, or nearly 1 percent, at $102.02 a barrel. Copper settled up on the day, but fell 1 percent on the week for its sharpest weekly loss in a month. The base metal fell in three sessions this week after fears that the United States might indeed have its first debt default due to the political gridlock in Congress. Benchmark copper on the London Metal Exchange closed at $7,200 from a close at $7,145 on Thursday, when it gained 0.6 percent.
Prices at 3:56 p.m. EDT (1956 GMT)
LAST/ NET PCT YTD CLOSE CHG CHG CHG US crude 101.92 -1.09 -1.1% 11.0% Brent crude 111.32 -0.48 -0.4% 0.2% Natural gas 3.776 0.053 1.4% 12.7% US gold 1268.20 -28.70 -2.2% -24.3% Gold 1269.38 -16.19 -1.3% -24.2% US Copper 3.27 0.02 0.7% -10.6% LME Copper 7200.00 55.00 0.8% -9.2% Dollar 80.396 -0.021 0.0% 4.7% CRB 286.613 -0.763 -0.3% -2.8% US corn 433.25 -5.00 -1.1% -38.0% US soybeans 1266.75 -21.25 -1.7% -10.7% US wheat 692.25 6.75 1.0% -11.0% US Coffee 116.70 2.30 2.0% -18.8% US Cocoa 2746.00 17.00 0.6% 22.8% US Sugar 18.93 0.21 1.1% -3.0% US silver 21.215 20.997 1.6% -29.8% US platinum 1372.00 -20.30 0.0% -10.8% US palladium 712.30 0.75 0.1% 1.3%