Gold and other precious metals prices fell Wednesday as investors again flocked to safer investments like cash and Treasurys in response to more bleak economic data.
Oil prices fell, while agriculture futures traded mixed.
"I'm afraid we've seen further liquidation throughout most of the metals," said James Steel, precious metals analyst with HSBC in New York. "There just seems to be more of a demand for cash and liquidation of hard assets seems to continue, and no doubt it's related to anticipation of a slower economy."
In recent months, commodities and equities have traded in near tandem as investors seek safer havens as they feared a long and painful recession. Commodities have also fallen as investors forecast that demand for raw materials would decline as the economy falters.
And there was plenty of evidence Wednesday of a still-weakening economy to discourage investors. Among the day's reports, the Institute for Supply Management said the nation's services sector contracted dramatically in November. Meanwhile, the Labor Department reported that productivity growth slowed in the third quarter. Later in the day, the Federal Reserve's beige book, a survey of regional business conditions that showed the country's economic condition has darkened further, offered little relief.
On Wall Street, stocks rallied for the second straight settsion with the Dow Jones industrials rising 172.60 to 8,591.69. But the major indexes alternated between gains and losses throughout the session as investors vacillated between pessimism about the economy and hopes that there might be a turnaround soon.
Gold for February delivery fell $12.80 to settle at $770.50 an ounce on the New York Mercantile Exchange.
Other precious metals prices also fell. March silver slipped 2.5 cents to $9.590 an ounce, while March copper futures fell 4.6 cents to $1.5545 a pound.
A strengthening dollar also hurt commodities prices. After fluctuating earlier in the day, the dollar moved higher against other major currencies, including the euro and the British pound. A strengthening greenback tends to curb demand for commodities, which are often used as a hedge against inflation.
Meanwhile, the yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 2.67 percent late Wednesday from 2.70 percent late Tuesday.
Oil prices declined modestly on the Nymex, as investors weighed falling global demand and a government report showing an unexpected decline in U.S. crude inventories.
Light, sweet crude for January delivery fell 17 cents to settle at $46.79 a barrel, after earlier falling to as low as $46.26, the lowest level since May 20, 2005.
In other Nymex trading, gasoline futures fell less than a penny to $1.0536 a gallon, while heating oil rose 1.89 cents to $1.6021 a gallon.
Grain prices were mixed on the Chicago Board of Trade.
March wheat futures fell 8.75 cents to $5.1975 a bushel, while March corn was unchanged with Tuesday's settlement price of $3.4825 a bushel. Prices ranged between $3.45 and $3.5425 during the session.
January soybeans added 3 cents to settle at $8.30 a bushel, after falling to as low as $8.20 a bushel earlier in the session.
