COMMODITIES-Gold tumbles on worries of Fed paring; oil rises on Syria
NEW YORK, Sept 12
NEW YORK, Sept 12 (Reuters) - Gold and copper prices fell on Thursday on speculation about the Federal Reserve's next move on the U.S. stimulus program, while oil climbed for a second day on renewed concerns over Syria.
Elsewhere, soybeans prices gained nearly 3 percent, their most in two weeks, after the U.S. Department of Agriculture cut its forecast more than expected for the grain's ending stocks in 2013/14.
The 19-commodity Thomson Reuters-Jefferies CRB index rose half a percent to add to Wednesday's slight gains, after losses in two earlier sessions.
Gold prices slipped 3 percent, as a sudden decline in the futures market shattered investor confidence, sending the precious metal to its biggest one-day drop in over two months.
Consensus is building among analysts that the Fed's policy meeting next week could result in the central bank paring back its $85 billion monthly bond purchases.
The Federal Open Market Committee is set to release a policy statement at the end of its two-day meeting next Wednesday.
Some think that the opaque jobless claims data and disappointing U.S. nonfarm payrolls data last week could complicate the Fed's decision on this.
The spot price of bullion dropped 3.2 percent to $1,321.11 an ounce by 5:00 p.m. EDT (2100 GMT), its biggest one-day fall since June 26. Earlier, the metal hit $1,320.19, its weakest since Aug. 15.
In U.S. gold futures, trading was momentarily halted at 2:54 a.m. EDT (0654 GMT) by CME Group's Stop Logic mechanism. In the one minute around the 20-second trading pause, gold slid $10 with an unusually heavy 4,300 contracts changing hands, Reuters data showed.
Stop Logic is aimed at preventing large price movements from cascading stop-price orders, an order to sell or buy a security when it reaches a particular price. It also allows participants to provide additional liquidity.
"The block trade of futures and the $10 gap down spooked the market right out of the gate," said Jeffrey Sica, chief investment officer of Sica Wealth Management, which oversees more than $1 billion in client assets.
The losses were all the more significant as investors also sold the dollar and U.S. equities.
Sica said that some sovereign wealth funds and hedge funds opted to reduce their gold positions after the sudden decline, extending the gold market's weakness later in the session.
In copper, the three-month contract on the London Metal Exchange slid to a session low of $7,025 per tonne, its weakest level since Aug. 8. It later pared losses to close down 1.5 percent at $7,060.
Oil's benchmark Brent crude for October settled up $1.13 at $112.63 a barrel, extending Wednesday's gain of 25 cents.
Prices climbed as investors monitored diplomatic efforts to eliminate Syria's chemical weapons and Libya declared force majeure on another three ports.
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