Gold tumbled the most in almost nine weeks after prospects for an emergency interest-rate cut by the Federal Reserve faded, reducing the appeal of the precious metal as hedge against inflation. Prices slumped back down from the $900 , falling nearly $20 an ounce as investors rushed to take profits. The dollar's sharp gains against other major currencies also had an impact on gold, which fell $19.40 to $882 an ounce.

The demand for gold typically rises during times of economic uncertainty since the metal is known for holding its value and is seen as a safe haven for investors. Last year, gold rose nearly 32 percent and toppled the $900 an ounce mark for the first time last week. Still, when adjusted for inflation, gold remains well below its record high. An ounce of gold at $900 in 1980 would be worth about $2,300 today. The dollar dropped on Thursday after Federal Reserve Chairman Ben Bernanke told a congressional committee that more interest rate cuts may be necessary and that the U.S. economic outlook has worsened.

The euro was up 0.1 percent at 1.4676 . As well as being helped by the weaker dollar, the euro was bolstered by comments from European Central Bank President Jean-Claude Trichet on Thursday. "It is absolutely clear that a solid anchoring of inflation expectations is really paving the way for a long-term high level of growth," Trichet told a conference on growth hosted by the ECB and the Bank of France. The euro overnight had already rebounded from two-week lows(1.4589) against the dollar after comments from European Central Bank Governing Council member Yves Mersch suggested the bank was not looking to cut interest rates yet.

Investors will watch for any developments in Washington over a possible stimulus package for the struggling economy that President George W. Bush has said he is considering.

Bush will hold a conference call with congressional leaders on Thursday to discuss $150 billion lift to the economy. Under discussion is a total package of $150 billion that would include both tax breaks and some spending, such as help for the unemployed.

Oil weakened below $90 a barrel on Friday, as bleak economic data intensified fears the United States would slip into a recession, hurting demand from the world's No.1 oil consumer. Burgeoning oil stocks in the U.S., coupled with warmer weather in North America, also dampened prices. Oil has since tumbled about 10 percent from its record-high of $100.09 a barrel reached on Jan. 3, taking pressure off energy cartel OPEC to boost output at its next meeting in February. London Brent crude was down 25 cents to $88.50 a barrel, having lost 75 cents the day before.