Gold futures fell the most in a week as mounting concerns on the U.S. economy and budget impasse eroded investment demand for the precious metal. Silver had the biggest drop in five weeks.
The Federal Reserve said yesterday that the economy will expand 2.3 percent to 3 percent in 2013, compared with 2.5 percent to 3 percent estimated in September. Lawmakers expressed pessimism on reaching a deal to avoid the so-called fiscal cliff involving more than $600 billion in tax increases and spending cuts at the start of the new year. Commodities headed for the first annual decline since 2008.
“There’s disappointment in the Fed’s assessment of the economy, and it seems to be saying that the economy will need all the help it can get,” Adam Klopfenstein, a senior market strategist at Archer Financial Services Inc. in Chicago, said in a telephone interview. “There’s also a growing belief that Congress can’t get a resolution to the fiscal cliff.”
Gold futures for delivery in February dropped 1.2 percent to settle at $1,696.80 an ounce at 1:57 p.m. on the Comex in New York, the biggest decline for a most-active contract since Dec. 4.
Yesterday, holdings in exchange-traded products backed by gold fell for the second straight day.
Silver futures for March delivery slumped 4.2 percent to $32.355 an ounce, the biggest slide since Nov. 2.
On the New York Mercantile Exchange, platinum futures for January delivery dropped 2 percent to $1,612.80 an ounce, the first loss in seven sessions.
Palladium futures for March delivery decreased 1.4 percent to $691.65 an ounce.