Commodity prices fall on signs of slower growth

AP News
Posted: May 19, 2011 4:08 PM
Commodity prices fall on signs of slower growth

Commodities fell across the board Thursday after new reports pointed to signs of a slowing economy.

Oil, gold, silver and grains all settled lower Thursday as investors sold contracts to remove some of the risk from their portfolios.

The Conference Board's index of leading economic indicators dropped 0.3 percent in April, the first decline since June 2010. Some of the decline occurred because of last month's jump in unemployment claims and lingering problems for the housing industry.

The Federal Reserve Bank of Philadelphia's monthly measure of regional manufacturing sank to the lowest reading since October.

Meanwhile, the number of people applying for unemployment benefits fell sharply for the second straight week, which suggested the job market is recovering slowly.

Investors are trying to determine how the economy will fare after the Federal Reserve ends a $600-billion bond-buying program at the end of June. The program went into effect in November, when the Fed feared the economy could fall back into a recession.

"The concern becomes, can this economy stand on its own two feet without the Fed pumping in money and I think, right now, there's a lot of doubts," Kingsview Financial analyst Matt Zeman said.

"The rate of growth that we're seeing is continuing to slow and I think it's really giving people pause to do much of anything," he said. "It's just kind of taking some risk off and sitting on the sidelines."

The broad-based decline came a day after most commodities rallied as the dollar grew weaker. A weaker dollar makes commodities, which are priced in dollars, more attractive to buyers using other currencies.

Metals used in manufacturing, including copper, platinum and palladium, settled lower on the disappointing report from the Philadelphia Reserve.

Copper is used in a variety of consumer products, from housing materials to electronics. Platinum and palladium are found in automobile catalytic converters, among other products.

In contracts for July, copper fell 5.25 cents to settle at $4.0525 a pound and platinum dropped $10.90 to $1,769 an ounce. June palladium settled down $9.05 at $728.15 an ounce.

Gold for June delivery fell $3.40 to settle at $1,492.40 an ounce while July silver dropped 16.5 cents to $34.932 an ounce.

In energy contracts, oil fell after the International Energy Agency said it had serious concerns about the negative effect of higher prices on the global economy.

Benchmark crude for June delivery fell $1.63 to settle at $98.93 per barrel on the New York Mercantile Exchange.

In other Nymex contracts for June, heating oil fell 1.12 cents to settle at $2.8947 per gallon, gasoline dropped 2.95 cents to $2.926 a gallon and natural gas fell 10.5 cents to $4.161 per 1,000 cubic feet.

Grains and beans prices were mixed.

In contracts for July delivery, wheat fell 5 cents to settle at $8.12 a bushel, corn dropped 1.5 cents to $7.4825 a bushel and soybeans were unchanged at $13.795 a bushel.