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Gold prices dropped to one-month lows on Friday,amid a sell-off in commodities as fear heightened that the global economy could plunge back into a recession.
Silver rates too dropped.
The base metals complex tumbled,led by a 13 percent loss in the London tin.
Asia8217;s stock market also slid and emerging market currencies fell amid fears the developed world is stumbling back into recession.
The world8217;s major economies pledged to prevent Europe8217;s debt crisis from undermining banks and financial markets,and said the euro zone8217;s rescue fund would be bolstered.
The news came a day after U.S. Federal Reserve Chairman Ben Bernanke warned of significant downside risks for economic growth,which triggered a sell-off in equities and commodities.
Spot gold fell as much as 0.9 percent to a one-month low of 1,719.8 an ounce,before recovering most of the losses to 1,734.69 by 0635 GMT.
U.S. gold shed more than 1 percent to 1,722.3,its lowest since Aug. 25. It stood at 1,737.30,headed for a 4.4 percent loss from a week earlier,its sharpest weekly loss since March 2009.
It8217;s recession fear,said a Hong Kong-based dealer,adding that investors fear policy makers around the world have a very limited choice of tools to spur economic growth,as interest rates are already low in major developed economies.
Gold may test 1,700,but 1,650 should provide very good support.
Spot gold is expected to consolidate between 1,680 and 1,920 per ounce over the next three months before resuming its long-term uptrend,Reuters technical analyst Wang Tao said.
Silver prices tracked losses in industrial metals. Spot silver fell more than 4 percent to 34.22,its lowest since July 5,and trimmed losses to 34.94.
U.S. silver tumbled more than 6 percent to 34.32,headed for a weekly loss of 15 percent 8212; its sharpest weekly decline since early May.
The dollar index edged down 0.3 percent on Friday,but was holding close to a seven-month high hit in the previous session,after investors fled commodities to the perceived safety of Treasuries.
The dollar has strengthened in all of this and everyone is de-risking and putting money into the dollar because of the deteriorating economic outlook,said Soozhana Choi,head of commodity research in Asia at Deutsche Bank in Singapore.
We saw massive de-risking across the board,and gold as well as other commodities weren8217;t unscathed.
