Even though US consumer and produce price inflation remained high in September, there are signs of both measures continuing to ease.
Poor figures on home building and consumer confidence confirmed the rapid drift in the US economy to a slump, meaning there would be further downward pressure on cost pressures.
Not even talk of big cuts by Opec and a small rise in oil could stop gold's slide.
Comex December gold futures dropped $US16.80, or 2.1% Friday to close at $US787.70 an ounce.
The Reuters-Jefferies CRB index, a global benchmark for raw materials prices, dropped 3.6% amid concerns that the global economy was heading into recession.
The abrupt falls in commodities – the RJ-CRB index hit its lowest level in four years – hit gold especially. It ended ended on Friday at a one-month low of $US775 an ounce in London, down 8.5% on the week.
Its retreat came as the US dollar strengthened and investors sold gold futures as they liquidated commodities indices and baskets.
Comex December silver futures dropped 30 US cents, or 3.1%, to $US9.335. That was after the price hit a day's low of $US9.09, which Bloomberg said was the lowest for a most-active contract since February 2006. The price has dropped 37% this year, while gold is down 6%, with all that fall happening last week.
Low demand from the jewellery and industrial sectors is said to behind the weakness and not even the usual collection of gold bulls among purists can shake the downward pressure.
Sliding economic activity, falling demand and levels of activity in many markets (especially India and China) are making consumers nervous.
UBS will release its new short-term forecasts for gold and other precious metals on tonight, our time, which is being widely anticipated as they will be one of the first to be released off the back of the past month and a bit of volatility in all markets.
Some dealers reckon there's a spillover effect from the slumping price of platinum which is being driven lower by not only the drop in demand from the jewellery sector, but the plunging demand from the car industry around the world.
Every major market is seeing fall sales: the US and Europe are worst hit, but even sales in China are weakening.
Platinum futures for January delivery fell $US10.30, or 1.2%, to $US881 an ounce in new York on Friday, the lowest closing price for a most-active contract since July 2005. The price fell 12% last week.
Base metals came under pressure in the week in London, but copper staged a late rally to end the week 5% higher at $US4,850 a tonne. Aluminium ended at $US2,298 a tonne, up 1.5% for the week.
Copper rebounded from the lowest price since January 2006, on hopes that the five months of falls may encourage buyers back into the market.
Copper supplies are a bit suspect: there's talk of industrial activity in Peru and grades keep falling as Escondida, the mine controlled by BHP Billiton and Rio Tinto.
There's talk of a strike at a mine in Peru owned by Freeport.
In New York, Comex copper futures for December delivery ended up 9.4 US cents or 4.5% on Friday at $US2.1795 a pound. That was after it hit the lowest level since early January, 2006 on Thursday of $US2.0405 a pound.
Union members have gone on strike twice this year at Freeport's Cerro Verde, the third-largest copper mine in Peru. Last's rise ended a four week fall that slashed prices by 33%.
JPMorgan Securities Ltd. this week forecast 2009 copper prices will be 30% lower than an August estimate because of slowing global economies.
The firm reckons the metal will average $4,888 a tonne next year, compared with the earlier estimate of $US6,950.
The action in gold and copper late in the week took attention from oil which rose Friday after it hit a 13 month low on Thursday.
The rise was small: up $US2 to settle at $US71.85 a barrel on the New York Mercantile Exchange. That's down over 50% from crude's July peak settlement price of $147.29 a barrel.
On Thursday, the contract ended at $US69.85, the lowest level since August 2007.
Opec is meeting earlier than expected to try and cut production to stabilise prices.
Now news reports say Opec will Friday announce it is cutting oil output to help lift crude prices that have dived 55 percent since striking record highs in July, as a global economic slowdown slashes demand, analysts said.
The Organization of Petroleum Exporting Countries, whose 12-member countries together pump about 40% say the special ministerial meeting in Vienna would be brought forward to October 24 from mid-November.
Algerian Energy Minister and current OPEC chief Chakib Khelil said on the weekend that Opec should order a "substantial" cut in oil output.
"If it has to be 1.5 million barrels per day, or two million barrels per day, that's what it will be," Khelil added, according to newsagency reports of comments made in Algeria.
Khelil said that OPEC wanted to see oil prices "remain stable" throughout the first half of 2009.
Many analysts are forecasting the group will cut output by between 500,000 and one million barrels per day.
