Futures prices for precious metals took a sharp drop Friday, with some analysts partly blaming the decline on the belief that the economy may be slipping into a recession.
On other markets, grain, soybeans and most livestock futures declined, while crude oil futures closed lower after advancing past $19 a barrel.
"Two bad things were going against precious metals," said Jack Barbanel, an analyst for Gruntal & Co. in New York.
One was technical resistance with gold bumping up against $500 an ounce, he said.
"But the underlying factor is still the recession-inflation" battle among economy watchers, he said.
"There's some confusion in the market on which way the economy is heading," Barbanel said. "That's why we've had choppy trading, not only in the precious metals, but in the agricultural commodities as well."
While some recent government statistics point toward inflation, he said, the opposite direction is suggested by such market factors as weakening stocks and the decline in some overseas interest rates and talk that they could be coming down further.
The slump in precious metals prices would seem to indicate that the deflationary scenario is, at least temporarily, uppermost in the minds of traders.
"But," said Barbanel, "we have not seen any major selling come into the (precious metals) markets--just no buying, people losing interest in it."
The implication, he said, is that the market might not be as bearish as it appears.
On the Commodity Exchange in New York, gold was $5.90 to $6.80 lower, with the contract for delivery in February at $487.80. Silver was 15.7 cents to 17.4 cents lower, with March at $6.87 an ounce.
Soybean futures prices declined sharply on the Chicago Board of Trade.
The retreat brought bean futures losses to 25 cents a bushel over the past week.
"It was just more long liquidation," with traders selling out of positions they had acquired earlier, said Dale Gustafson, an analyst with Drexel Burnham Lambert.
He said that while the amount of soybeans being processed by crushers may not be out of line with expectations, it's probably too much for current demand.
Traders were also keeping a nervous eye on the financial markets, with the stock market down again and precious metals prices sharply lower.
Wheat futures drew some strength from fresh Soviet buying interest, but not enough to lift prices above Thursday's close.
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