Gold prices slumped on Friday

(Reuters) – Gold prices slumped on Friday, on track for the third-worst day in two decades as traders sold to cover losses, while stocks were mixed in a jittery market worried about the growing possibility that Greece will default.

Trading was volatile and stocks seesawed between gains and losses, capping a tumultuous week in financial markets that saw major U.S. equity indexes down more than 5 percent.

Statements by policy makers suggesting more action will be taken to ease the euro zone debt crisis failed to calm investors. Gold slid to a seven-week low, tumbling 6 percent, and stocks were unable to hold early gains built on comments out of Europe.

Comments from European Central Bank officials saying the ECB could provide further liquidity to the region’s banking sector and speculation that the ECB may cut rates helped sentiment initially.

“Financial markets are sick and tired of the authorities in Europe and in the U.S. twiddling their thumbs and not doing substantive things to solve this crisis of the global economy,” said Barton Biggs, managing partner at New York-based Traxis Partners. “The odds of a double-dip recession on a global basis are increasing rapidly.”

Investors’ are concerned that authorities are unable to respond effectively to the mounting euro zone debt crisis and sluggish growth in major world economies.

A pledge from the Group of 20 finance ministers and central banks to take “all steps necessary” to calm the financial system sparked only a brief recovery in risk sentiment.

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