September 17, 2008
Commodities Lose Ground
The financial meltdown on Wall Street gripped commodity markets Tuesday as investors sought refuge in cash and risk-free assets, pulling crude oil down 3 percent, gold 1 percent and grains 2.5 percent.
"Investors are looking for liquidity and are getting out of their positions," said Eugen Weinberg, commodities analyst at Commerzbank. "It's a case of get into cash and get out of everything else.""Nobody is really looking at any fundamentals at the moment," Weinberg added.
The Reuters/Jefferies CRB index, a global commodities benchmark tracking 19 futures markets, fell more than 3 percent to nine-month lows.
Oil fell to a seven-month trough, as economic worries, coupled with reports that Hurricane Ike had caused minor damage to U.S. oil platforms and refineries, prompted investors to exit.
U.S. light crude for October delivery, which fell as much as $4.17 at one point, was down $3.32 at $92.39 a barrel, adding to the previous session's fall of more than $5 and a decline of almost 37 percent from above $147 in mid-July.
Even gold, the traditional haven for investors in times of trouble, struggled to attract any major buying.
Spot gold, which had closed sharply higher in the last session, fell as much as 2 percent during Asian trade but stabilized later to trade at $779 an ounce, down $7.20 from the nominal close Monday in New York.
Analysts said gold was not significantly higher for several reasons, including risk reduction across asset classes and growing awareness of new counterparty risk in owning index and exchange- traded fund products.
"In extremis, safe-haven holding of gold is theoretically justified to preserve value. Over the past week, this is what it has done," John Reade, commodity strategist at UBS Investment Bank, said in a note. "Gold could fall and still be a good hedge if everything else falls by more."
Industrial metals, seen like oil as a barometer of the real economy, fell heavily again. Copper futures on the London Metal Exchange hit an eight-month low and were last at $6,836 a ton, down 1.4 percent. Platinum tumbled another 5 percent as fears grew about future demand from carmakers, who use the metal to clean exhaust fumes.
Originally published by Reuters.
(c) 2008 International Herald Tribune. Provided by ProQuest LLC. All rights Reserved.