MSN: Gold prices plunge on recession fears, dollar gain
NEW YORK (AP) - 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 $67 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 lowest close for a front-month contract since June 13, 2007, when crude settled at $66.26.
In other Nymex trading, heating oil futures fell 14.13 cents to end at $2.0562 a gallon, while gasoline prices dropped 12.1 cents to finish at $1.5709 a gallon.
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 source 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.
