Many commodities plunged this week, with oil approaching 10-month lows, as traders worried about the eurozone debt crisis, the strong US dollar, Chinese demand and falling global share prices.
Gold faced heavy losses as many traders also took profits after striking a record high the previous week.
“The commodity markets have been driven by currency movements and the general negative sentiment across the global equity markets,” Sucden analyst Myrto Sokou said.
The euro plummeted to a four-year low of US$1.2144 on Wednesday as fears grew about massive debt and high public deficits in the eurozone.
Markets were also shocked by Germany’s unilateral move to impose restrictions on what it termed highly speculative trading practices.
“Commodities have received further pressure from a strengthening US dollar and amid concerns about the Chinese economic slowdown that could affect demand levels for oil and base metals in the near-term,” Sokou said.
In a study published this week, meanwhile, London-based consultancy Capital Economics said crude oil and industrial metals have plunged by between 15 percent and 25 percent in value between April 20 and May 20.
“The sharp falls in many commodity prices over the past month reflect a mix of pressures and worries, some of which are temporary but most of which are not,” economist Julian Jessop at Capital Economics said.
OIL: Crude oil nosedived as the euro plumbed a four-year US dollar low, and investors reacted to unexpectedly weak jobless claims data in top energy consumer the US.
New York crude collapsed on Thursday to US$64.24, its lowest level since July 30, 2009, while Brent oil hit US$70.20, a level last seen in early February.
“Crude oil prices tumbled this week ... as the euro slid to a four-year low against a robust US dollar that weighed heavily on most commodity prices,” Sokou said. “Prices extended losses amid news that Germany decided to ban naked short-selling of some securities [in a move] that raised further concerns over the eurozone’s debt crisis and its long-term growth opportunities.”
VTB Capital’s Andrey Kryuchenkov said it was “the same old story of yet another week of losses as investors continue to pull out of riskier assets.”
Oil also took a hit from the faltering US economic recovery, after the US Labor Department said initial jobless claims totaled 471,000 in the week to May 15, up 5.6 percent from the prior week.
By late on Friday on the New York Mercantile Exchange, Texas light, sweet crude for delivery in July sank to US$70.02, from US$73.25 a week earlier for the now-expired June contract.
On London’s Intercontinental Exchange, Brent North Sea crude for July delivery dropped to US$71.72, compared with US$77.75 for the June contract.
PRECIOUS METALS: Prices plunged on the back of the strong US dollar, with gold dropping nearly five percent, silver losing almost 10 percent and palladium wiping out more than one fifth of its value. Platinum hit the lowest point since late December last year and ended the week down 13.3 percent.
“Gold tumbled in volatile trading ... with investors cashing in on the precious metal,” Kryuchenkov said.
Gold had hit an all-time pinnacle of US$1,249.40 an ounce last week, dragging sister metal silver to a two-year peak.
By late on Friday on the London Bullion Market, gold tumbled to US$1,179.75 an ounce from US$1,236.50 the previous week.
Silver slid to US$17.72 an ounce from US$19.64.
On the London Platinum and Palladium Market, platinum slumped to US$1,492 an ounce from US$1,721.
Palladium collapsed to US$419 an ounce from US$536.
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