Gold hit another historic high this week close to 1,200 dollars per ounce, as trade was driven by central bank purchases and the struggling greenback, before pulling lower as Dubai rattled global markets.
Many investors dumped shares in alarm on Friday, sending Asian and US markets plunging as fears of debt defaults sowed fresh concern for the world economy after Dubai's shock request to suspend major loan repayments.
However, Europe's leading stock indices rebounded, reversing earlier sharp losses that were driven by Dubai's shock debt announcement.
"News from Dubai, according to which two local state-owned companies plan to reschedule their debt, lead to a firmer US dollar, which in turn had put gold massively under pressure," said Commerzbank analyst Carsten Fritsch.
The development "put commodity prices across the board under great pressure", Fritsch added.
PRECIOUS METALS: Gold hit a record high above 1,195 dollars an ounce for first time, spurred by a purchase of IMF gold by Sri Lanka's central bank, before pulling lower as the news from Dubai hit traders' screens.
On the London Bullion Market, the precious metal surged as high as 1,195.13 dollars on Thursday, extending its record-breaking run, before sliding as investors cashed in profits.
"Panic profit-taking on the broader commodity markets saw a very stark correction in gold prices, finally breaking the uptrend," said VTB Capital analyst Andrey Kryuchenkov.
However, he added: "The case for gold remains very bullish, with increasing rhetoric over central bank diversifications and US inflation expectations still running high as we go into 2010."
"We are witnessing a dramatically changing environment with bullion becoming one of the favourite investment vehicles within the investment community."
Gold won support in recent weeks from inflationary fears and increasing moves by central banks to diversify assets into gold.
The International Monetary Fund (IMF) announced Wednesday it had sold 10 tonnes of gold to Sri Lanka's central bank for 375 million dollars as part of a restructuring of its financial resources.
The latest sale brought the total IMF gold sold to central banks to 212 tonnes. India bought 200 tonnes in October for 6.7 billion dollars and Mauritius bought two tonnes on November 11 for 71.7 million dollars.
Prices had also smashed their way to record levels on Wednesday on a newspaper report that India was mulling the purchase of more IMF gold reserves.
A weaker greenback makes gold cheaper for buyers using stronger currencies, which tends to boost demand and prices.
By late Friday on the London Bullion Market, gold rallied to 1,166.50 dollars an ounce from 1,140 dollars a week earlier.
Silver dipped to 17.98 dollars an ounce from 18.18 dollars.
On the London Platinum and Palladium Market, platinum slid to 1,426 dollars an ounce at the late fixing on Friday from 1,435 dollars the previous week.
Palladium eased to 358 dollars an ounce from 360 dollars.
OIL: The price of oil slumped to a seven-week low point close to 72 dollars on Friday with investors spooked by a shock call from the Dubai government to suspend the debt of a key state company, analysts said.
New York's main contract, light sweet crude for January delivery, reached 72.39 dollars -- the lowest level since the start of October.
"The sole reason for the oil price dump can be summed up in one word: Dubai," said Tamas Varga, an analyst at PVM Oil Associates.
"If the 2008 recession was started by banks overlending then the current debt problem in Dubai is a big warning sign that we're not out of the woods yet.
"Banks running out of cash has a knock-on effect on every aspect of life, bringing share and commodity prices down and strengthening the dollar. This is exactly what is happening now," added Varga.
Global stock markets dropped for a second day running on Friday over investor alarm about the potential for a widespread default after Dubai's shock demand to suspend the debt of a key state company.
Asian indices suffered massive falls, with Hong Kong's Hang Seng Index slumping almost five percent by the close.
Oil prices began falling sharply on Thursday as news of Dubai's request emerged.
Earlier this week, the oil market reacted to US economic data that signalled a possible upturn in demand for energy in the United States -- the world's biggest oil-consuming nation.
Fresh US data showed jobless claims fell in the week ending November 21 to an adjusted 466,000, the lowest amount since September 2008.
A separate report showed consumer spending rose more than expected in October, and a third said sales of new homes rose at their strongest pace since September 2008.
Traders also digested the weekly oil inventories data from the US Department of Energy (DoE).
The DoE reported on Wednesday that US crude stockpiles rose by one million barrels in the week ended November 20, while gasoline reserves climbed by the same amount.
However distillate stockpiles dropped by 500,000 barrels last week, while analysts had expected a rise of 500,000 barrels.
Distillates include heating fuel, which is traditionally in high demand at this time of year in the northern hemisphere winter.
By Friday on the New York Mercantile Exchange (NYMEX), light sweet crude for delivery in January slid to 74.90 dollars compared with 76.71 dollars a week earlier.
On London's InterContinental Exchange (ICE), Brent North Sea crude for January delivery sank to 76.10 dollars from 77.03 dollars a week earlier.
BASE METALS: Base metals prices fell in unison as investors reacted to the news from Dubai.
"News flow from Dubai shocked investors and also put metal markets under considerable pressure," added Fritsch at Commerzbank.
By Friday on the London Metal Exchange, copper for delivery in three months fell to 6,787 dollars a tonne from 6,804 dollars a week earlier.
Three-month aluminium slid to 1,990 dollars a tonne from 2,004 dollars.
Three-month lead decreased to 2,308 dollars a tonne from 2,340 dollars.
Three-month tin dipped to 14,800 dollars a tonne from 14,975 dollars.
Three-month zinc eased to 2,220.25 dollars a tonne from 2,230 dollars.
Three-month nickel declined to 16,150 dollars a tonne from 16,840 dollars.
COCOA: Cocoa prices also dipped in line with other commodities.
By Friday on LIFFE, London's futures exchange, the price of cocoa for delivery in March weakened to 2,159 pounds a tonne from 2,190 pounds a week earlier.
On the New York Board of Trade (NYBOT), the March cocoa contract fell to 3,256 dollars a tonne from 3,310 dollars.
SUGAR: Sugar prices edged higher.
By Friday on LIFFE, the price of a tonne of white sugar for delivery in March firmed to 608.20 pounds from 601 pounds a week earlier.
On NYBOT, the price of unrefined sugar for March nudged higher to 22.28 US cents a pound from 22.10 cents.
GRAINS AND SOYA: Grains and soya prices drifted lower in holiday-shortened trade amid Thanksgiving in the United States on Thursday.
By Friday on the Chicago Board of Trade, maize for delivery in March eased to 4.04 dollars a bushel from 4.05 dollars a week earlier.
January-dated soyabean meal -- used in animal feed -- slipped to 10.41 dollars from 10.46 dollars.
Wheat decreased to 5.67 dollars a bushel from 5.80 dollars.
COFFEE: Coffee prices traded mixed.
By Friday on LIFFE, Robusta for delivery in January slipped to 1,325 dollars a tonne from 1,330 dollars a week earlier.
On the NYBOT, Arabica for March firmed to 137.25 US cents a pound from 136.50 cents.
RUBBER: Malaysian rubber prices rose amid stubborn concerns over tight supplies, dealers said.
"The market sentiment is still strong due to the weather factor as well as active enquiries from Europe," a dealer told national news agency Bernama.
On Thursday, the Malaysian Rubber Board's benchmark SMR20 climbed to 261.10 US cents per kilo, from 247.75 cents last week.
The Malaysian market was closed on Friday due to the Eid Al-Adha, a holiday to mark the end of the Hajj for Muslims.
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