Commodities fall on worries about future demand

AP News
Posted: Aug 18, 2011 4:23 PM
Commodities fall on worries about future demand

Commodity prices fell Thursday after fresh economic reports added to concerns about a weak global economy. Gold was a notable exception as it hit a new record near $1,830 an ounce.

U.S. economic news was discouraging: consumer prices and claims for jobless benefits rose, existing home sales fell and manufacturing weakened in the mid-Atlantic region. Overseas, Japan's exports fell for the fifth straight month in July and European leaders continued to grapple with sovereign debt problems.

Investors sold contracts for everything from oil to wheat and industrial metals as they worried about the potential for future demand if the global economy continues to slow.

Kingsview Financial analyst Matt Zeman said debt issues are key concerns for investors. "Add to that these just extremely weak economic numbers that we're seeing and it spells trouble and that's what we're seeing," he said.

The government said the number of people applying for unemployment benefits rose last week. The Consumer Price Index increased 0.5 percent in July as Americans paid more for necessities like fuel and food.

Gold prices rose for a fourth day. The precious metal is considered a relatively stable asset during economic turmoil. Gold for December delivery rose $28.20 to finish at $1,822 an ounce after hitting $1,829.70 an ounce earlier in the day. That was a record in dollar terms but still below the 1980 peak after adjusting for inflation.

Several analysts have predicted that gold could reach $2,000 an ounce if economic troubles deepen.

Gold's increase benefited silver and platinum, which are traded both as precious and industrial metals.

September silver rose 33.7 cents to end at $40.688 an ounce and October platinum increased $6.90 to $1,847.70 an ounce.

In other trading, September copper fell 6.6 cents to finish at $3.966 a pound and September palladium fell $18.90 to $757 an ounce.

Oil and other energy products dropped. Benchmark West Texas Intermediate crude for September delivery declined $5.20, or 5.9 percent, to finish at $82.38 per barrel on the New York Mercantile Exchange.

In other Nymex trading for September contracts, heating oil fell 8.68 cents to end at $2.8748 per gallon, gasoline futures lost 8.71 cents at $2.7832 per gallon and natural gas fell 4.1 cents to $3.892 per 1,000 cubic feet.

Wheat for September delivery fell 19.75 cents to $7.0775 a bushel, December corn lost 12.5 cents at $7.13 a bushel and November soybeans fell 5.75 cents to $13.61 a bushel.