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Supply worries supporting crude oil prices last week gave way to concerns about the global macro economic situation and demand for oil.
The ICE Brent October contract traded down $1.44 a barrel at $111.33 and Nymex October West Texas Intermediate fell $1.25 a barrel to $85.99.
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Gold lost its lustre as a haven asset, falling 0.82 per cent to $1,841.94 a troy ounce. Caution over bullion reigned, with the euro sold on debt concerns and the dollar at a seven year high against the European currency.
Edel Tully, precious metals strategist at UBS warned: “While gold is capable of rallying in the face of a strong dollar, an extended upward move in the dollar does put some obstacles in its path.”
Copper for three month delivery on the London Metal Exchange declined 1.76 per cent to $8,678.50, while aluminium lost 0.55 per cent to $2,354.
Barclays Capital said it remained positive on copper fundamentals but did “not expect prices to recover strongly and to markedly outperform until short-term macro worries and concerns surrounding Chinese demand dissipated”.
Mining groups were hit, with Xstrata down 3.6 per cent to 951.80p, Rio Tinto losing 3.3 per cent to £34.48 and Glencore declining 4.2 per cent to 396.70p.
Grain prices were mixed amid cautious trading ahead of US government supply and demand data on Monday.
Traders were expecting further confirmation of a fall in US crop yields and tighter supplies in the monthly World Agricultural Supply and Demand Estimates report from the US Department of Agriculture.
CBOT December wheat rose 0.1 per cent to $7.30 per bushel and December corn was flat at $7.36
Economic worries gripped commodities markets in European morning trading, with selling depressing oil and industrial metals. Commodities, including gold, were affected by the dollar’s “haven rally” given the weakness of the euro.
