NEW YORK: Gold prices and most other commodities tumbled Thursday, reflecting steep losses on Wall Street and a strengthening dollar.
Commodities prices have tended to mirror the direction of the equities markets in recent weeks, and they continued to do so on Thursday.
What's more, the U.S. dollar strengthened considerably against most other major currencies, including the euro and the British pound, after a series of interest rate cuts by central banks overseas.
When a central bank cuts interest rates, it tends to weaken that nation's currency, meaning the dollar typically trades higher against it.
Commodities are often used as a hedge against inflation, so when the dollar strengthens, investors tend to flee commodities.
Analysts expect the dollar to continue to climb.
"There is more room to go in Europe to cut rates, as opposed to the U.S., which has very little room to go,'' said Tom Pawlicki, commodities analyst with MF Global Research in Chicago.
"Also, the fact that the credit crisis is in the early stages of spreading to Europe and Asia, I think that could continue to drive the dollar.''
Gold for December delivery dropped $10.20 to $732.20 an ounce on the New York Mercantile Exchange.
Other precious metals prices also fell. December silver tumbled 40 cents to $10.055 an ounce, while December copper futures shed 9.35 cents to $1.7255 a pound.
On Wall Street, a bleak outlook from computer gear maker Cisco Systems and concerns about widespread economic weakness sent the major stock indexes down more than 4 percent.
The Dow Jones industrial average tumbled more than 440 points.
A strengthening dollar and dim economic reports also weighed on energy prices. Light, sweet crude for December delivery fell 7 percent, or $4.53, to settle at $60.77 a barrel.
Prices tumbled as low as $60.16 at one point, a level last seen in March 2007.
Oil prices have now fallen nearly 60 percent since peaking at $147.27 a barrel in mid-July.
Grain prices mostly fell on the Chicago Board of Trade.
December wheat futures fell 14.75 cents to $5.225 a bushel, while corn for December delivery fell 12.25 cents to $3.78 a bushel.
January soybeans rose 2 cents to settle at $9.06 a bushel, after falling as low as $8.83 earlier in the session.
