Commodities traded lower on Tuesday, being weighed down by the US budget impasse.
There is increasing concerns due to the slow progress in negotiations to reach a deal to avert the so-called “fiscal cliff”. There is less than a month left before $600 billion in automatic budget measures kick in on January 1st, 2013.
Republicans handed a proposal to the White House on Monday for steep spending cuts but they were dismissed.
The ICE dollar index, a gauge of USD against a basket of six major currencies, dropped to 79.632 from 79.909.
Crude oil fell for a second straight session in New York, closing lower at $88.50, down 0.7 percent. London’s benchmark Brent crude settled at $109.84 a barrel, down 1 percent.
Markets are worried that the fiscal cliff could push the US economy back into recession. Even if a budget deal is reached, some speculate that oil demand would remain weak next year in many developed economies with slowing growth, which would likely drag on oil prices.
Gold slipped more than 1 percent today due to many investors closing positions and booking profits in order to have cash. Heavy fund liquidation and options-related selling drove the precious metal to a one-month low of $1,691.