NEW YORK — Gold ended Thursday’s session lower to produce its longest run of monthly declines in more than 16 years, while oil’s benchmark Brent crude finished February with its sharpest monthly loss since June.
Copper, another key commodity, closed with its biggest monthly drop since October, reinforcing the price declines seen across most commodity markets this month.
Uncertainties about the global economy had weighed on metal and oil prices and the broader commodity complex in February.
The Thomson Reuters-Jefferies CRB index settled flat for Thursday, but was down nearly 4 percent on the month. In January, the CRB rose 3 percent, helped by stronger oil, corn and cotton prices.
Analysts said the outlook for March was cloudy, as financial markets braced for sweeping U.S. budget cuts and another fiscal crisis that the International Monetary Fund warned could slow the U.S. and world economies.
FOCUS IS ON SEQUESTER
On the positive side, data on Thursday showed the U.S. economy grew slightly in the fourth quarter, reversing an earlier estimate showing contraction.
A drop in new claims for unemployment benefits last week added to a string of data that suggested the world’s top economy improved early this year.
Even so, some analysts had forecast a higher revision to the fourth quarter GDP data and the jobless claims data extended a trend that had been expected.
In the immediate term, “we think investor focus will be on the sequester”, Edward Meir, analyst at INTL FC Stone said, referring to the $85 billion in U.S. budget cuts due from March 1, absent a highly unlikely political deal between the Democratic and Republican parties.
GOLD LOSES BIG-TIME IN FEB
Gold prices fell 5 percent in February, ending down without a break from October in the longest string of monthly declines since 1996. Bullion holdings in gold-backed exchange traded funds also posted sharp monthly losses.
Gold’s losses have come at the benefit of stock prices as some investors turned to equity markets instead. The S&P 500 and the Dow Jones Industrial Average for U.S. stocks are within striking distance of record highs.
“Investors are reassessing where they have their money allocated at, and they are now focusing on the equity markets which have been holding up very firm,” said Phillip Streible, senior commodities trader at futures brokerage RJ O’Brien.
In Thursday’s session, spot gold fell 1.1 percent to $1,578.86 per ounce by 3:18 PM. U.S. gold futures for April delivery settled down $17.60 to $1,578.10 an ounce.
ECONOMY/DEMAND WORRIES WEIGH ON CRUDE
In crude oil, the London-traded Brent fell to a six-week low near $111 a barrel for the session, capping a month-end sell-off that took almost $8 off the market in two weeks as worries about the global economy and oil demand resurfaced.
“The oil market had been unsuccessfully trying to hold above this week’s lows, and the worries about the less-than-expected GDP number have entered the equation,” said Gene McGillian, analyst at Tradition Energy in Stamford, Conn.
Brent closed down 49 cents at $111.38 a barrel, having earlier touched a low of $110.87, the lowest since Jan. 18.
For the month, Brent lost 3.6 percent in February.
U.S. crude fell 71 cents to $92.05 a barrel, ending February down after three straight monthly gains. It dropped as low as $91.57 for the session and lost 5.6 percent over the month.
NATGAS, SOY BUCK TREND WITH FEB GAINS
Not all commodities were down for February. Natural gas had its first monthly gain in four months as cold U.S. weather spiked up demand for heating.
The front-month gas contract in New York settled at $3.486 per million British thermal units, up 1.5 percent on the day and 4.4 percent on the month. It was the first monthly increase since October, when prices rose 11.2 percent.
Soybeans edged higher after a rally on Thursday spurred by strong export demand for U.S. grown soy. The front-month soybean contract in Chicago settled up 16-3/4 cents, or 1.2 percent, at $14.74-1/4 a bushel. For the month, the contract rose 0.5 percent.