Singapore - Crude oil and gold edged up on Friday, but remained on track for their biggest weekly losses in more than a month, as fears of recession in developed economies offset demand by investors picking up some commodities after an earlier selloff.
Faced with pressure from investors to show action, finance ministers and central bankers from the Group of 20 economies said they would take all steps needed to calm the global financial system.
The US Federal Reserve’s warning of a bleak economic outlook and a lowered global growth forecast by the International Monetary Fund (IMF) drove fretful investors to cut holdings of commodities over chances of slackening demand for energy and industrial metals.
The dollar fell against a basket of currencies, but is still near its highest level in seven months struck on Thursday. It is set to strengthen for a third week in four as investors plumped for the perceived safety of US government bonds.
“Everyone is de-risking and putting money into the dollar because of the deteriorating economic outlook,” said Soozhana Choi, head of Asia commodity research at Deutsche Bank in Singapore.
“We saw massive de-risking across the board and gold as well as other commodities weren’t unscathed.”
Multi-month lowGold seems to have lost some of its safe haven appeal and is headed for a third week of decline, with its biggest weekly drop in more than four months.
Spot gold fell as much as 0.9% to a one-month low of $1 719.80 an ounce, before erasing Friday’s losses to climb to $1 745.39 by 0708 GMT.
US gold <GCcv1> fell more than 1% to $1 722.3, its lowest since Aug. 25, and was headed for a weekly loss of 3.8%, its biggest since May 8.
Brent futures <LCOc1> traded 13 cents higher at $105.62 a barrel by 0714 GMT. The contract is down 5.3% for the week and is poised for its biggest weekly decline in seven.
US crude <CLc1> rose 12 cents to $80.63 a barrel, after climbing as high as $81.71. It has fallen more than 8% for the week in its first weekly decline in five.
“The overall direction is weak,” said Jonathan Barratt, managing director for Commodity Broking Services in Sydney.
“Oil has been moving in line with equities.”
Equities, copperAsian stocks fell after U.S. stocks and commodity markets sank. The Reuters-Jefferies CRB benchmark of 19 commodities lost 4.4% on Thursday in the biggest rout since May 5, as investors fled to the dollar and US Treasuries.
Concern that Greece may fail to qualify for its next aid package next month and rating agency Standard & Poor’s US credit downgrade in August have stoked investor concerns the global economy is sliding back into recession.
London copper extended losses in another brutal selloff on Friday to hit its lowest in more than a year and is on course for its steepest weekly loss since October 2008.
Three-month copper on the London Metal Exchange fell as low as $7 115.75 a tonne on Friday to a level not seen since August 2010. By 0720 GMT, it was at $7 303.75, down 4.8%.
In Shanghai, the most-active December copper contract <SCFc3> fell its 6% daily limit to ¥56 940 a tonne.
Among the grains, US soy fell 1.4% to its lowest in 10 months, while corn and wheat gave up gains amid the broad selloff triggered by recession fears.
The world’s major economies pledged to prevent Europe’s debt crisis from undermining banks and financial markets, and said the eurozone’s rescue fund would be bolstered.
That came a day after US Federal Reserve chief Ben Bernanke warned of significant downside risks to growth.
Americans filed fewer new claims for jobless benefits last week but the decline was too little to dispel worries the economy was dangerously close to recession.
“From the eurozone to the sovereign debt ratings cut, confidence has just been hit,” said David Thurtell, a Singapore-based analyst at Citigroup.
“People are saying: ’We’re prepared to sell now and ask questions later’.”