The gloom surrounding global financial markets after Lehman Brothers filed for bankruptcy and Merrill Lynch?s takeover by Bank of America, has finally engulfed commodities markets worldwide. After briefly warding off the threat of a ripple effe?t-gold and precious metals rose on Monday because of investor inter?st-most commodities classes, be it precious metals, agriculture or crude oil, dropped sharply on Tuesday as nervous investors sought refuge in cash and risk-free assets.
The Reuters-Jefferies CRB index, a global commodities benchmark tracking 19 futures markets, fell more than 3% on Tuesday to near nine-month lows as traders unwound their positions.
Gold fell by around 1.2% at 1720 hrs IST in the international spot markets and was being quoted at $783.2 per troy ounce. At one time, the precious yellow metal had dropped by around 6%. Gold had jumped 5.4% in the past two days.
?I am not surprised with today?s fall in commodity markets as the US economy is bottoming out and the exposure of investors across all asset classes is under a scanner,? a senior economist from one of the India?s leading commodity exchanges said. Experts said the slump in crude oil prices, also triggered by a likely fall in global demand, pulled down commodities markets.
US light crude for October delivery fell as much as $4.11 at one point during the day, adding to the previous session?s more than $5-falls and almost 37%-decline from its peak of above-$147 in mid-July. Even a falling US dollar and speculation that the Federal Reserve could hint at a rate-cut when it meets later in the day, did little to trigger interest in commodities.
Among metals, by midday copper had dropped by around over 3% in Shanghai, while aluminum, zinc and lead also fell as fears of global economic slowdown gripped investors. In the grain markets at the Chicago Board of Trade, soybeans for delivery in November fell by more than 20 cents to $11.79 per bushel and December corn fell to around $5.62 per bushel. Wheat and rice also fell.