Oil slides, gold rises as Senate stops U.S. debt limit talks
NEW YORK (Oct 15) Most commodities ended lower on Tuesday, with oil, energy and metal markets falling as the U.S. Congress continued to wrangle over the U.S. debt limit, while gold erased early losses to gain 1 percent on the Washington impasse.
Copper and a few agricultural markets rose as investors bought on harvest concerns and sought value at recent lows. The Thomson Reuters-Jefferies CRB index, a 19-commodity bellwether, closed down 0.4 percent, pressured by declines in energy, precious and industrial and grain markets.
Crude oil prices fell throughout the session on both sides of the Atlantic as hopes for a deal to end the U.S. debt crisis steadily diminished and as talks proceeded in Geneva around an Iranian proposal to achieve a breakthrough in a decade-old standoff over its nuclear program.
U.S. and Brent crude oil prices tumbled by nearly 40 cents in after-market trade on news the U.S. Senate would suspend fiscal talks until House Republicans had a plan for how to proceed on the U.S. debt limit.
Brent crude futures settled down $1.14 at $109.90 a barrel in its third straight losing session. U.S. oil settled down $1.20 at $101.21 a barrel.
"The market seemed to move forcefully on the Senate suspension," said John Kilduff, partner at Again Capital LLC in New York. "Oil markets are going to take this hard if we can't get a deal done."
Gold prices, however, reversed steep early losses after the latest news of the ongoing fiscal impasse in Washington triggered safe-haven buying.
Bullion's gains briefly surpassed 1 percent late in the U.S. session as negotiations in Congress sputtered, leaving both chambers grasping for a way to reopen the government and raise the country's borrowing authority with a Thursday deadline near.
The precious metal rebounded about $35, or 3 percent, from an overnight three-month low near $1,250 an ounce. Spot gold
was up 0.7 percent at $1,281.16 an ounce by 4:17 p.m. EDT (2017 GMT), off a high of $1,287.90 an ounce.
Copper fell on divisions between lawmakers in Congress over the U.S. government's borrowing limit weighed on investors who were already concerned about a growing market surplus.
"Everybody's on pins and needles watching the news headlines from Washington. Gold's up in a very quiet knee-jerk move, but I don't think it will hold," said Frank McGhee, head precious metals dealer at commodities brokerage Alliance Financial LLC.
