Gold prices collapsed Wednesday, plunging to a 13-month low
as a stronger dollar and growing fears of a global recession spurred
investors to yank money out of commodities.
A barrage of
worrisome corporate earnings has deepened investors' pessimism about
the direction of the economy, prompting them to shift funds into less
risky assets like government bonds. At the same time, a sharply
stronger dollar is feeding selling of commodities bought as a hedge
against inflation and weakness in the U.S. currency.
Gold for
December delivery fell $32.80 to settle at $735.20 an ounce on the New
York Mercantile Exchange, after earlier dipping to $720, the lowest
level since Sept. 4, 2007.
"We have now come full circle .... The
remaining question now emerging is: has gold seen its lows, or are we
at the start of a phase in the mid-to-high $600s? There is plenty of
uncertainty on that front," Jon Nadler, analyst with Kitco Bullion
Dealers, said in a note.
Other precious metals also tumbled.
December silver fell 61.5 cents to settle at $9.46 an ounce on the
Nymex, while December copper dropped 14.15 cents to settle at $1.8655 a
pound.
In energy trading, oil prices fell below $6 a barrel to
16-month lows Wednesday after the government reported big increases in
U.S. fuel supplies - more evidence that the economic downturn is drying
up energy demand.
Light, sweet crude for December delivery fell
$5.43 to settle at $66.75 on the Nymex, after falling as low as $66.20.
It was the lowst close for a front-month contract since June 13, 2007,
when crude settled at $66.26.
Meanwhile, agriculture futures fell on the Chicago Board of Trade.
Wheat
for December delivery lost 31.25 cents to settle at $5.1775 a bushel,
while December corn fell 26 cents to settle at $3.85 a bushel.
December soybeans lost 50.5 cents to settle at $8.6475 a bushel.
Falling
commodities prices have come at heavy cost for producing countries. In
Argentina, the steep pullback in the price of soy, wheat, corn and beef
have slashed export income, a key soue of government revenue.
In
a surprise move, Argentina said Tuesday that would nationalize $30.1
billion in private pension funds in response to the global fiscal
crisis.
