Oil Futures Tumble Again

Oil futures prices tumbled again Friday, sending tremors into the precious metals and financial futures markets.

Gold futures declined $6.40 an ounce on the Commodity Exchange in New York, with the contract for delivery in February settling below the $350 psychological support level for the first time in two weeks.

The financial futures markets, on the other hand, advanced strongly.

Treasury bond futures at the Chicago Board of Trade were up 25/32 of a point before profit taking trimmed that advance in the March contract to 11/32 at the close.

“With lower oil prices, inflation comes under control and investors will favor financial assets over precious metals,” said Gary Dorsch, an analyst in Chicago with G. H. Miller & Co.

Financial futures also were supported by the Federal Reserve Board injecting more reserves into the banking system, he said. “This created downward pressure on short-term interest rates and led to a rally in the bond market.”

Heating oil futures declined the 2-cents-a-gallon limit for two contracts on the Mercantile Exchange in New York, and other deliveries also were sharply lower.