Gold prices, other commodities tumble
By SARA LEPRO, AP Business Writer
Friday, December 5, 2008 5:40 PM CST
NEW YORK 12/05/08 - Gold prices continued their descent Friday as a troubling report on the U.S. jobs market exacerbated concerns about a worsening global recession.
Other commodities, including energy and agriculture futures, also declined.
Markets were rattled Friday by the worst jobs data in the U.S. in 34 years. The Labor Department reported that employers slashed a far worse-than-expected 533,000 jobs in November — the biggest monthly loss of jobs since 1974. The unemployment rate rose to a 15-year high of 6.7 percent from 6.5 percent in October.
According to the report, job losses were widespread, hitting manufacturing, construction, retail, financial and other sectors.
“It’s pretty much more of the same,” said Tom Pawlicki, energy and precious metals analyst at MF Global in Chicago. “(Commodities are) trading off of expectations for weak economic growth in the U.S. and globally.”
Commodities have tended to follow the movement of the equities markets as of late. On Friday, stocks turned sharply higher in the afternoon after showing steep losses in the first half of the session. Initially discouraged by the jobs report, investors later rallied at the prospect for further government measures to prop up the economy.
As futures markets close ahead of the stock market, commodities missed out on the late day surge. The Dow Jones industrial average index rose nearly 260 points to finish at 8,635 after falling as much as 258 points earlier in the session. Analysts said investors believed the employment report would pressure the government into taking more steps to stimulate the economy.
Gold for February delivery dropped $13.30 to settle at $752.20 an ounce on the New York Mercantile Exchange. The contract fell 8.2 percent this week.
At this point, gold is on track to post its first yearly loss after seven straight years of gains, wrote Jon Nadler, senior analyst at Kitco Bullion Dealers Montreal, in a research note.
“Gold continues to track the Dow for the time being, and it remains caught in the bigger spiral of falling asset prices,” he said.
Other precious metals prices also fell. March silver lost 9 cents to $9.43 an ounce, while March copper futures shed 9.6 cents to $1.3735 a pound.
The dollar was mixed against other major currencies. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.68 percent late Friday from 2.56 percent late Thursday.
Energy prices sank on the Nymex as investors feared that demand for gasoline will fall even more as rising unemployment leads to fewer people driving to work.
The continuing decline in prices is raising the prospect that gas prices might fall below $1 a gallon at the pump. Less than five months ago, a gallon of gas averaged more than $4.
Light, sweet crude for January delivery settled down nearly $3 to $40.81 a barrel. Prices fell as low at $40.50, levels last seen in December 2004.
In other Nymex trading, gasoline futures tumbled 6.83 cents to settle at 90 cents, while heating oil slid 8.26 cents to $1.4265 a gallon.
Grain prices tumbled on the Chicago Board of Trade.
March wheat futures fell 10.5 cents to $4.755 a bushel, while corn for March delivery dropped 24.75 cents to $3.0925 a bushel. The contract hit a new two-year low of $3.06 a bushel earlier in the session.
January soybeans fell 27.5 cents to $7.835 a bushel, after earlier falling as low as $7.77 a bushel - a low not seen since May 2007.
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