COMMODITIES : Precious Metals Slump; Energy Futures Rise

Soviet President Mikhail S. Gorbachev’s announcement of a unilateral reduction of armed forces in Eastern Europe sent gold futures prices down about $5 an ounce Wednesday on New York’s Commodity Exchange, analysts said.

Futures prices of other precious metals also declined while copper futures leaped on renewed concerns about tight supplies.

On other markets, energy futures were mostly higher, grains and soybeans were mixed, livestock and meat futures were mixed and stock index futures advanced.

Many investors consider gold and other precious metals relatively secure investments in times of political unrest and economic distress.

Gorbachev’s visit to New York was perceived as a signal that superpower tensions were easing, prompting many speculators to unload gold futures contracts, analysts said.

“It’s almost as if good news for everybody else is bad news for gold,” said James Steel, a metals analyst with Refco Inc. in New York.

Gorbachev’s announcement of planned military cuts contributed to the selloff in the precious metals markets on speculation that a reduction in Soviet military spending “could lead the United States to finding a convenient avenue to reducing its budget deficit through cutbacks on the military side,” said Fred Demler, metals economist with Drexel Burnham Lambert Inc. in New York.

Copper Prices Surge

Steel said a meeting scheduled for today among finance ministers from the seven largest Western nations, including the United States, is expected to produce an agreement to support the dollar, a notion that spurred further selling of gold futures.

Gold fell $4.70 to $5.40, with the contract for delivery in February at $427.70 an ounce; silver was 2.1 cents to 3.4 cents lower, with March at $6.28 an ounce.

Copper futures prices soared on the Commodity Exchange following reports of an explosion at one of the world’s largest copper mines, in Bouganville, Papua New Guinea. The incident refocused attention on the extremely tight global supply situation, analysts said.

Copper rose 1.80 to 6 cents, with the active March contract at $1.373 a pound and the spot December contract at $1.5725 a pound.

Most energy futures prices headed higher in moderate trading on the New York Mercantile Exchange, reflecting concern about crude oil supplies, analysts said.

The rally was linked to lower-than-expected weekly crude supply figures released Tuesday by the American Petroleum Institute.

West Texas Intermediate crude oil settled 28 to 33 cents higher, with January at $15.74 a barrel; heating oil was 0.29 to 0.52 cent higher, with February at 48.21 cents a gallon, and unleaded gasoline was 0.59 cent lower to 0.41 cent higher, with January at 43.76 cents a gallon.

Wheat futures prices rose on the Chicago Board of Trade, partly in reaction to Gorbachev’s remarks and partly on expectations, which were later confirmed, that a large export offer was in the works.

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