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Weak U.S. data pound oil as gold hits another record Add to ...

Oil prices fell Wednesday for a fourth straight session and copper extended losses for a third running day as weak U.S. data prompted investors to fear a prolonged gloom in the world’s largest economy.

Corn and wheat retreated from Tuesday’s sharp rally as cooler weather in the U.S. Midwest offset worries about the impact of a recent heatwave on the region’s crops.

The broad sell-off caused the 19-commodity Reuters-Jefferies CRB index to drop 1.3 per cent, marking its largest one-day decline in six weeks.

Gold was the only major commodity that bucked the decline. Futures of the precious metal rose nearly 2 per cent – its biggest leap in three weeks – as investors opted for so-called safe-haven assets.

Data showed the U.S. services sector fell in July to its lowest level since February 2010. New U.S. factory orders for June also slipped, hurt by weak demand for transportation equipment.

Investors are bracing for more gloom when the government releases its monthly jobs report on Friday.

Earlier this week, markets were weighed down by weaker-than-expected manufacturing data after dismal second-quarter U.S. growth numbers released at the end of July.

New York-traded crude oil fell 2 per cent to below $92 (U.S.) per barrel and Brent crude in London lost nearly 3 per cent to around $113 a barrel as a surge rise in U.S. petroleum stockpiles added to the bearish economic data.

The U.S. Energy Information Administration, which gathers and releases all official data on the U.S. energy sector, said gasoline stockpiles rose sharply and demand over the past four weeks fell 3.6 per cent compared with a year-ago.

“With increasing concern over the economy and the consumer, the four-week, year-on-year, decline in gasoline demand sticks out as another indicator of consumer weakness and possibly bodes poorly for Friday’s employment data,” said John Kilduff, partner at New York energy fund Again Capital LLC.

In copper , the most active U.S. futures contract, September, settled down 1.6 per cent at $4.3260 a pound in New York in spite of a strike at the giant Escondida copper mine in Chile providing fundamental support to prices.

London’s benchmark three-month copper finished down 1.4 per cent at $9,549 a tonne.

U.S. gold futures most-active contract, December, settled up 1.3 per cent at $1,666.30 after setting an all-time peak above $1,675 an ounce.

Gold has hit record highs several times over the last three months as investors worried about sovereign debt crises in Europe and the United States veered toward the yellow metal. For the year so far, it has risen 17 per cent.

“The key factors that have been driving investment demand for gold – concerns about sovereign debt burdens, the long-term value of certain reserve currencies and fear of persistent inflation – are likely to continue for the foreseeable future,” said Tom Holl, co-manager at BlackRock World Resources Fund.

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