Oil and gold prices fell Wednesday as the fiscal cliff nears and a decision on Greek debt is still impending.
Light crude (CLC1) was down 1 percent or 87 cents at $86.31 per barrel in mid-day trading. Crude oil futures (CLF13.NYM) for January delivery were down 1.20 percent at $86.13 a barrel on the New York Mercantile Exchange. Futures fell 3.37 percent over a five-day period.
Prices of gold (GCC1) fell, for the third day, by 1.46 percent. Gold futures (GCX12.CMX) for November delivery were down 0.14 percent on the COMEX division of the New York Mercantile Exchange.
Gold prices were dragged down by a strong U.S. dollar and deflationary concerns amongst investors.
Investors are also worried about the fiscal cliff, which is nearing, with thirty-three days to go for January 2013.
The U.S. energy department said in a report late Tuesday, that weekly supply of oil has decreased. Although this should push up oil prices in the future, other factors like the fiscal cliff and the Greek debt are bound to weigh down the oil prices.
The fiscal cliff is the increase in taxes and spending cuts to the tune of $600 billion, which will come to effect in January, unless U.S politicians reach an agreement to prevent the occurrence. With fiscal cliff, the U.S. economy might slide into recession.
The impending decision about the Greek debt is also adding fuel to the already negative investor sentiment. There is very little clarity if Greece will be subjected to a reduction its debt, which adds to the confusion.
The global economic environment is also looking vulnerable with the OECD (Organization for Economic Co-operation and Development) forecasting that the global economy is expected to make an uneven recovery in the next two years.
“The world economy is far from being out of the woods,” OECD Secretary-General Angel Gurría said during the Economic Outlook launch in Paris, a statement from OECD reported.
“The US ‘fiscal cliff’, if it materializes, could tip an already weak economy into recession, while failure to solve the euro area crisis could lead to a major financial shock and global downturn.”
Stock markets in the U.S. were trading positive in the day. The Down Jones Industrial Average Index was up 0.51 percent while the S&P 500 Index was up 4.66 percent. The NASDAQ Composite Index rose 0.32 percent.
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