February 15, 2013 / 8:51 PM / 5 years ago

COMMODITIES-Gold tumbles most in a week since May; oil down too

* Gold tumbles after breaking below $1,600 support
    * Oil down on surprise US industrial output drop
    * Copper slides with Chinese buyers away on holiday
    * Grains climb but post losses for week

    By Barani Krishnan
    NEW YORK, Feb 15 (Reuters) - Gold prices suffered their
sharpest weekly loss in nine months on Friday after crashing
through key support levels, and oil and copper fell after a
surprise drop in U.S. industrial output sparked concerns about
recovery in the world's largest economy.
    Agricultural markets halted a selling spree as grains prices
inched higher, although corn, wheat and soybeans still ended
lower on the week. 
    Raw sugar, arabica coffee and cocoa also looked vulnerable
to a sharper downside in coming sessions after tumbling most of
the week, traders said. 
    Analysts said a sturdy dollar limited the potential for a
commodities rebound as raw materials priced in the greenback
became less appealing to buyers holding other currencies.
    The dollar hit a three-week high against the euro and
extended gains against the yen as G20 officials struggled
to find common language on currency manipulation ahead of a
summit in Moscow later on Friday.  
    The Thomson Reuters-Jefferies CRB index, a global
commodities bellwether, was down 0.4 percent on the day and
nearly 1 percent on the week. Ten of the 19 commodity markets
tracked by the CRB were down, with gold, silver and U.S.
crude oil all losing about 2 percent each.
    Gold broke below two key support levels -- $1,625 and $1,600
-- to hit lows last seen in August.
    The spot gold price of gold sunk to an intraday low
of $1,598.04 an ounce, its weakest since Aug. 16, before
recovering to above $1,605.
    The 2 percent drop for the session marked gold's sharpest
one-day loss since November. The 4 percent slide on the week
made it the deepest weekly loss since May.
    "The 1,625 level was a big support and once that was broken,
stop-selling orders kicked off and now we are in a new range of
$1,550 to $1,625," said Adrien Biondi, head of precious metals
trading at Commerzbank.
    Sell-stops are automatic technical selling signals that
start when prices break through certain support levels. They are
set up in such a way to allow traders to limit losses in a
falling market.
    While the dollar's strength was certainly to blame for some
of gold's decline on Friday, the shiny metal also suffered from
a dearth of physical demand from Chinese buyers away this week
for the Lunar New Year holiday, traders said.
    In oil, London's Brent crude closed at $117.66 a
barrel, down 0.3 percent on the day and 1 percent on the week.
    U.S. crude's front-month contract settled at $95.86,
down $1.45, or 1.5 percent, for the session. It was up slightly
on the week.
    "We gave (U.S.) oil many chances to get above $98 and test
$100 a barrel. And it becomes a situation where we can't rally,
so we sell it," said Richard Ilczyszyn, chief market strategist
at iitrader.com LLC in Chicago.
    The sell-off came as U.S. industrial production dipped 0.1
percent last month after a revised 0.4 percent gain in December.
Economists had been expecting a modest increase in industrial
output in January. 
    In copper, the three-month benchmark contract in London
 closed at $8,207 per tonne from a last bid of $8,237 on
    Used in construction to power generation and often regarded
the price-setter for base metals, copper has lately been
outperformed by aluminum and zinc - two other
widely-used metals.
    "Aluminium wasn't doing much ... and probably people thought
it was time for a catch-up," said Stephen Briggs, a metals
strategist at BNP Paribas in London. "In zinc, it's hard yet to
get enthusiastic about the fundamentals, so that rally looks a
little overdone."
    Some are optimistic for a rebound in copper demand when
Chinese buyers return from their holiday next week. China is the
world's largest copper consumer.
    "Right now, demand for copper is only coming from China and
the U.S. because Europe is a mess," said Henry Liu, head of
commodity research at Mirae Asset Securities in Hong Kong.
 Prices at 3:16 p.m. EST (2015 GMT)      
                             LAST/      NET    PCT     YTD
                             CLOSE      CHG    CHG     CHG
 US crude                    95.94    -1.37  -1.4%    4.5%
 Brent crude                117.87    -0.13  -0.1%    6.1%
 Natural gas                 3.153   -0.010  -0.3%   -5.9%
 US gold                   1608.80   -25.90  -1.6%   -4.0%
 Gold                      1605.70   -28.76  -1.8%   -4.1%
 US Copper                  373.70    -0.05   0.0%    2.3%
 LME Copper                8206.00   -34.00  -0.4%    3.5%
 Dollar                     80.494    0.036   0.0%    4.9%
 US corn                    698.75     4.00   0.6%    0.1%
 US soybeans               1424.50     6.50   0.5%    0.4%
 US wheat                   742.25    10.25   1.4%   -4.6%
 US Coffee                  136.95    -1.05  -0.8%   -4.8%
 US Cocoa                  2141.00    12.00   0.6%   -4.2%
 US Sugar                    18.00     0.06   0.3%   -7.7%
 US silver                  29.849   -0.504  -1.7%   -1.3%
 US platinum               1677.70   -33.20  -1.9%    9.0%
 US palladium               753.15   -10.90  -1.4%    7.1%
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