Gold futures slumped to a four-week low, closing under $1,700 an ounce, as a stalemate in U.S. budget talks drove commodities down. Silver, platinum and palladium also dropped.
Twenty-one of 24 raw materials in the Standard & Poor’s GSCI Spot Index fell. Democrats and Republicans have four weeks left before more than $600 billion in tax increases and federal spending cuts are triggered. Gold slid about $12 an ounce in about a minute during Asian trading, data compiled by Bloomberg show.
“Gold is being sold along with just about everything else in commodities with the worries on the fiscal cliff,” Bart Melek, the Toronto-based head of commodity strategy at TD Securities, said in a telephone interview. The metal “is usually said to be a safe haven, but the threat to economies globally from the fiscal cliff is having knock-on effects.”
On the Comex in New York, gold futures for February delivery dropped 1.5 percent to settle at $1,695.80 at 1:37 p.m. Earlier, the price touched $1,692.60, the lowest for a most-active contract since Nov. 6.
If the so-called fiscal cliff isn’t averted, the U.S. may face a recession, according to the Congressional Budget Office.
The slump in Asia amid low volume probably was spurred by “frustration” that prices remain below $1,750, UBS AG said in a report.
Silver futures for March delivery fell 2.8 percent to $32.808 an ounce on the Comex.
On the New York Mercantile Exchange, platinum futures for January delivery declined 1.9 percent to $1,582.90 an ounce, the biggest drop since Oct. 23.
Palladium futures for March delivery fell 1.2 percent to $682.70 an ounce.