COMMODITIES-Oil, gold at 2-week low as US fiscal worry dominates

Wed Nov 28, 2012 5:42pm EST

* Oil prices down for 3rd day running
    * Gold in biggest one-day decline in 3 weeks
    * Natgas tumbles as U.S. cold weather looks to moderate
    * Copper down first time in 5 sessions


    By Barani Krishnan
    NEW YORK, Nov 28 (Reuters) - Commodities ended broadly lower
on Wednesday, with oil falling for a third day and gold tumbling
its most in three weeks, as investors worried about U.S.
economic health in the coming year even if lawmakers can make a
deal to avoid the so-called fiscal cliff.
    Crude oil hit a two-week low on expectations that fuel
demand will remain weak even if the U.S. Congress reaches a deal
by Dec. 31 to avoid $600 billion in automatic spending cuts and
tax increases -- dubbed the fiscal cliff -- that could tip the
world's largest economy into recession.
    U.S. House Speaker John Boehner voiced optimism that
Republicans could broker a pact with the White House to avoid an
impending budget crisis at the year-end. His comments helped
bring crude off session lows and turn U.S. stocks higher. 
    However, government data showing another week of low demand
and a large build in gasoline inventories reinforced bearish
expectations for global fuel consumption.
    Gold also hit a two-week trough after the dollar's jump
against a basket of currencies triggered automated sell
orders that pushed the price down more than $20 in less than
five minutes as investors sold off 2 million ounces of the
precious metal.
    In base metals, copper prices posted the first
decline in five sessions.
    Natural gas closed down 2 percent on forecasts for
less-severe U.S. cold weather in coming days that could cut
dependence on gas for heating. 
    The Thomson Reuters-Jefferies CRB index, a
commodities bellwether, settled down 0.4 percent, with 12 of its
19 markets in negative territory. 
    Some agricultural markets bucked the price slide. Wheat
 rose for a seventh day while arabica coffee 
rebounded from 2-1/2-year lows.  
          
   
    
    AGGRESSIVE SELLING
    Commodity prices have mostly slid over the past week on U.S.
fiscal worries.
    "We suspect that the time is now approaching when investors
will start to give the politicians a helping hand in the fiscal
cliff talks by doing their bit - selling more aggressively,"
said Edward Meir, a commodities analyst at Intl FC Stone.
    "This is not necessarily a bad thing, as it will almost
certainly give the politicians the needed kick in the backside,
not too dissimilar to what was doled out to the European
politicians at the height of their dithering over the debt
crisis."
    Euro zone finance ministers and the International Monetary
Fund reached agreement on Tuesday on reducing Greece's debt. But
the deal provided only a mild boost to commodity prices, with
analysts noting it would not solve all of Europe's problems.
    
    BRENT HITS 12-DAY LOW
    In Wednesday's session, London's Brent crude oil 
settled down 0.3 percent at $109.51 per barrel after marking a
12-day low at $108.44.
    U.S. crude finished down 0.8 percent at $86.49 a
barrel. 
    U.S. government data on energy consumption released on
Wednesday showed a drop in weekly crude stockpiles. But a sharp
build in gasoline inventories fed worries about demand. 
    Gasoline stockpiles showed a near 3.9-million-barrel build
last week, well over analyst expectations for a 900,000-barrel
gain, as demand again trailed year-ago levels. Stockpiles on the
East Coast, where Hurricane Sandy devastated the fuel
distribution network earlier this month, also rose, as did
distillate inventories in the region. 
     "I don't think anyone wants to put on a big position" in
oil, said Richard Ilczysyn, chief market strategist and founder
of iitrader.com LLC in Chicago.  
   "There's a belief that in 2013 demand will be relatively low
and the economies are going to be relatively weak around the
world," he said.
    
    2 MLN OUNCES OF GOLD DUMPED IN 5 MINUTES
    Gold prices posted their biggest one-day drop in three weeks
as investors dumped an equivalent of 2 million ounces of U.S.
gold futures in less than five minutes.
    Benchmark gold futures in New York settled 1.5
percent lower at $1,716.50 after slipping to a two-week low of
$1,705.50. 
    The spot price of bullion hit a session bottom at
$1,705.64. 
    "More likely this could be a short play, with the seller
looking to trigger stops below the market and thus extend the
move lower significantly," said Ross Norman, chief executive at
London gold dealer Sharps Pixley.
    Some blamed the decline on computer-driven speculative
selling of gold, after the precious metal's ascent to six-week
highs on Friday.
    A combination of funds' month-end profit taking long
liquidation after last week's rise and options-related selling
around expirations also pressured bullion, traders said.
    "The fact that we did not make any progress following the
break on Friday could indicate that leveraged buyers are still
not prepared to engage, or they are closing down shop for the
year," Saxo Bank vice president Ole Hansen said.
  
 Prices at 5:17 p.m. EST (2217 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    86.59    -0.59  -0.7%  -12.4%
 Brent crude                109.58    -0.29  -0.3%    2.0%
 Natural gas                 3.696   -0.073  -1.9%   23.7%
 
 US gold                   1716.50   -25.80  -1.5%    9.6%
 Gold                      1719.35     0.04   0.0%    9.9%
 US Copper                  352.45    -1.20  -0.3%    2.6%
 LME Copper                7767.50   -39.50  -0.5%    2.2%
 Dollar                     80.238   -0.159  -0.2%    0.1%
 
 
 US corn                    760.25     0.25   0.0%   17.6%
 US soybeans               1446.25    -3.00  -0.2%   20.7%
 US wheat                   876.00     3.00   0.3%   34.2%
 
 US Coffee                  144.65     4.85   3.5%  -36.6%
 US Cocoa                  2508.00     6.00   0.2%   18.9%
 US Sugar                    19.16    -0.07  -0.4%  -17.5%
 
 US silver                  33.684   -0.297  -0.9%   20.7%
 US platinum               1610.10    -7.90  -0.5%   14.6%
 US palladium               673.15     4.95   0.7%    2.6%