Commodities dropped across the board for a second consecutive day on deepening concerns about economic weakness in the United States and Europe.
Oil, gasoline, silver and palladium each fell more than 5 percent as Thursday's session came to a close. Even gold wasn't immune, dropping $7.30 to settle at $1,659 an ounce.
The Labor Department said Thursday that first-time claims for unemployment benefits fell 1,000 last week to 400,000. That's still higher than the 375,000 level economists say signals healthy job growth.
Manufacturing, which has been a key driver of U.S. growth since the recession ended in 2009, remains weak. Consumers are also cutting back on spending because of high fuel and food prices.
Slower growth in the U.S. could translate into waning demand for oil and other commodities if businesses and consumers continue to cut back. Investors are also worried about Europe's sovereign debt problems and weaker manufacturing in China, a huge importer of commodities.
Traders took their cues from other markets. Stocks fell sharply, and the yield on the two-year Treasury note hit a record low as investors sought out relatively stable investments. The dollar rose against other currencies.
Since commodities are priced in dollars, a stronger dollar makes them more expensive for buyers who use other currencies.
The decline in stocks prompted investors to sell gold for a profit after its recent jump, MF Global senior market strategist Rich Ilczyszyn said.
"Investors just...want out of the risk," he said. "It's very hard for one commodity to shine when everything else is getting whacked."
CPM Group analyst Carlos Sanchez said the trading environment is prompting some investors to buy gold because it is considered a more stable store of value in uncertain economic times. But, when prices push higher, investors tend to sell for a profit.
Silver for September delivery dropped $2.327, or 5.6 percent, to $39.431 an ounce.
September copper fell 9.05 cents to $4.2355 a pound, October platinum fell $55.60 to $1,729.40 an ounce and September palladium settled down $42.15, or 5.3 percent, to $752.95 an ounce.
In energy trading, benchmark crude for September delivery fell $5.30, or 5.8 percent, to settle at $86.63 per barrel on the New York Mercantile Exchange. The price was a six-month low.
Heating oil fell 12.5 cents, or 4.1 percent, to settle at $2.8939 per gallon, gasoline futures dropped 19.41 cents, or 6.6 percent, to $2.7372 per gallon and natural gas fell 14.9 cents, or 3.6 percent, to $3.941 per 1,000 cubic feet.
Wheat for September delivery fell 28.75 cents, or 4 percent, to settle at $6.8175 per bushel, December corn fell 11.5 cents to $7.015 a bushel and November soybeans fell 27.75 cents to $13.4525 per bushel.