Silver Slump, Leading Commodities Drop on Dollar, Growth
Feiwen Rong and Dave McCombs
15 (Bloomberg) - Gold
plunged below $800 an ounce, silver dropped as much as 12
percent and oil, corn and copper slumped as the dollar's rebound
reduced the appeal of commodities after a six-year boom.
Palm oil tumbled as much as 9 percent, and rubber and wheat
fell as the dollar headed for its longest winning streak in
more than two years and on concern a spreading global economic
slowdown will reduce demand for raw materials.
measured by the Standard & Poor's GSCI index, have tumbled
21 percent from their record July 3, descending into a bear
market. Oil traded near its lowest for more than three months,
gold for eight months and silver for almost a year. Copper
and corn reached six-month lows this week.
have made a peak,'' said investor Marc Faber, 62, who publishes
the Gloom, Boom & Doom Report. ``Whether that is a final
peak or an intermediate peak followed by higher prices, we
don't know yet. It could go lower.''
fell to $788.65 an ounce, its lowest since Dec. 17, and traded
at $791.85 at 3:15 p.m. Singapore time today, down 1.8 percent.
Silver's 12 percent drop was the most since June 2006 and
the metal traded at $12.65 an ounce, down 10.8 percent.
the psychological support at $800 got broken, we saw some
stop-loss selling come through until we found new support
about $790 when some physical buying came in,'' Charles Dowsett,
head of structuring and trading of precious metals at ABN
Amro Holding NV, said by phone from Sydney today.
has dropped 23 percent from its record $1,032.70 an ounce
on March 17 and silver has slumped 40 percent from its $21.3550
peak the same day.
expect commodity prices to remain subdued until mid- 2009,''
said Arjuna Mahendran, head of investment strategy at HSBC
Private Bank in Singapore. ``The major issue in commodities
is the proliferation of ETFs and hedge funds. As they unwind
positions, this leads to the price overshooting.''
dollar has climbed 5.3 percent against the euro this month
and reached a 5 1/2-month high today, heading for its fifth
weekly gain. U.S. consumer prices rose at the fastest pace
in 17 years in July, reducing the ability of the Fed to lower
interest rates should the economic slowdown deepen.
really a reshuffle of assets away from commodities,'' Jon
Nadler, a senior analyst at Kitco Minerals & Metals Inc.
in Montreal, said in a telephone interview today. ``Investors
see that the Fed is resolved to fight inflation by hiking
rates,'' which may help push up the dollar, he said.
dollar has ``bottomed'' against the euro, Goldman Sachs Group
Inc. said in a research note, citing weakening global growth,
declining oil prices and an improved U.S. trade balance.
rally has been ``dollar-driven probably because we are supposedly
seeing more writedowns in the European banks,'' said ABN Amro's
Dowsett in Sydney. ``We could see gold go all the way down
to $750 an ounce.''
oil for September delivery dropped as much as $1.65, or 1.4
percent, to $113.36 a barrel on the New York Mercantile Exchange,
and traded at $113.58 at 3:21 p.m. Singapore time. Copper
fell 1.7 percent to $7,257 a ton, corn declined 2.7 percent
to $5.6150 a bushel, and palm oil tumbled as much as 9 percent
to 2,392 ringgit ($714) a ton.
contact the reporters for this story: Dave McCombs in Tokyo
at email@example.comFeiwen Rong in Singapore at Frong2@bloomberg.net
Last Updated: August 15, 2008 03:30 EDT