By Foreign Staff (BusinessDay)

FEARS that slowing economic growth was hurting global demand sent commodity prices across the board tumbling on Friday, with gold plunging below $800/oz, the biggest weekly decline in more than 25 years.

Gold found support below $790 after falling nearly 5% in early sessions on Friday, as the precious metal's downward slide ran out of steam following a powerful dollar rally. Spot gold hit an intraday low of $773,90, its weakest since November 20, and was last trading at between $787,65 and $789,25, down from $811,25 late on Thursday.

"I am not surprised to see a breakthrough of $800 now, and I guess what's coming into play now is more technical selling below $800," said Darren Heathcote of Investec Australia in Sydney.

"We'll have some people targeting $750, but I think we would need to see a continuation in that dollar strength to give it sufficient momentum to head that way," he said.

Gold's drop dragged down the other precious metals, with silver losing as much as 14%, its lowest level since September 5, before closing down 10% at $12,93/oz, the biggest drop in more than two years.

Palladium slipped 3% to its weakest in nearly two years, while platinum was also down 2%. Spot platinum ended at $1365/$1385,00/oz from its previous close of $1481/$1501, while spot palladium fell to $281/$289 an ounce from $306,50/$314,50 late on Thursday in New York.

The slide in precious metals knocked the resources-heavy JSE and sent the rand to a seven-week low against the dollar. The broader all share index fell 2,06% to 27246,63 points, led by a 5,68% drop in the gold index.

The rand was trading at R7,9050 to the dollar in mid- afternoon trade, 0,8% softer than its previous close in New York of R7,8420. It slumped to R8,0025 earlier in the day, its weakest mark since June 25.

"It's a big smack, obviously because of the resource prices coming down," Gideon Muller, a trader at Thebe Securities, said. "Despite (New York's) Dow Jones being up, resources are pulling down our market."

However, it was not only precious metals that were affected. Crude oil was $2 lower to about $113 a barrel in New York on Friday. Prices have fallen sharply since reaching a record high of $147,27 a barrel on July 11.

"There will be a precipitous slowdown in global growth and that means a lot less demand for things like energy and base metals," said Michael Pento, a market strategist at Delta Global Advisors in Huntington Beach, California. "It would be insane to step in and buy oil or metals now. These markets will be vulnerable for the next four of five months."

Sixteen of 19 commodities in the Reuters-Jefferies-CRB index declined this month, after the index plunged 10% last month, the biggest such drop in 28 years. Only wheat, cattle and nickel are up this month.

"Prices have made a peak," said Marc Faber, who forecast in June that commodities would start to fall.

"Whether that is a final peak or an intermediate peak followed by higher prices, we don't know yet."

"Demand is a key driver here," said Daniel Brebner, global head of commodities at UBS.

"The key concerns are over western economies, perhaps more importantly emerging economies and predominantly China -- where growth has been slowing."

The Chinese economy grew at a rate of 10,1% in the second quarter of this year -- still very high compared to single-digit growth in Europe, but slower than 12,6% in the same period last year.

A report released early on Friday showed that Europe's economy contracted in the second quarter for the first time since the introduction of the euro almost a decade ago.

Banking group UBS wrote in a report published earlier this month that the world was "precariously close" to a recession next year.