|Chennai||Rs. 25020.00 (-0.32%)|
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Gold for February delivery dropped $21.10 to finish Thursday at $1,696.80 per ounce.
Investors are uncertain about what's ahead for the economy if Republicans and President Barack Obama fail to agree on a new budget. Without an agreement in place, tax increases and spending cuts will occur Jan. 1 that many economists believe could send the U.S. into a recession.
The Federal Reserve has announced measures to support the economy, which typically benefit gold and other commodities. But the Fed also predicted growth will be no more than 3 percent in 2013. It also expects the unemployment rate to remain at higher levels until late 2015. The unemployment rate was 7.7 percent in November.
Although gold prices rose Wednesday on the Fed's announcement, investors began selling Thursday to lock in profits, which suggests they believe the Federal Reserve may have run out of ways to help the economy, Kingsview Financial Group analyst Matt Zeman said.
Investors are also concerned about an apparent lack of progress in the budget negotiations. "It's likely to get more erratic as the time window continues to close here in the next two weeks," he said. "I'm looking for just a lot of erratic, sloppy trade without a whole lot of meaning behind it right now."
"It's really hard to gauge what's truly going on this time of year when a lot of people have already called it a year," Zeman said.
In other metals contracts for March, silver fell $1.427 per ounce, or 4.2 percent, to end at $32.355 per ounce, copper dropped 5.6 cents to $3.66 per pound and palladium fell $9.50 to $691.65 per ounce. January palladium dropped $33.60, or 2 percent, to $1,612.80 per ounce.
Other commodities were mostly lower.
Benchmark oil fell 88 cents to finish at $85.89 per barrel, heating oil fell 2.31 cents to $2.9437 per gallon, wholesale gasoline dropped 4.44 cents to $2.6021 and natural gas ended down 3.5 cents at $3.347 per 1,000 cubic feet.
In agricultural crop contracts, March wheat fell 3.5 cents to end at $8.085 per bushel, March corn dropped 5.25 cents to $7.2025 per bushel and January soybeans rose 3 cents to $14.765 per bushel.
Orange juice futures rose for a fourth straight day on concerns about next year's production in Florida. Frozen orange juice concentrate for January delivery rose 3.15 cents, or 2.3 percent, to end at $1.3725 per pound.