Commodities fall as European crisis worries deepen

AP News
Posted: Dec 08, 2011 3:40 PM
Commodities fall as European crisis worries deepen

Metals and most energy prices fell Thursday as concerns deepened about Europe's efforts to deal with its crippling debt crisis.

Gold, palladium and oil each fell about 2 percent while silver finished down 3.3 percent. Natural gas, corn and soybeans rose.

European Central Bank President Mario Draghi said there was no existing plan for large-scale government bond purchases, which was something many investors had expected. The central bank did cut its benchmark interest rate to 1 percent and took other steps to help Europe's economy.

Stock markets and the euro fell while borrowing costs for some European governments jumped. Many investors moved money from stocks and commodities into the dollar and U.S. Treasurys. Commodities were hurt because they are priced in dollars. A stronger dollar makes them more expensive for buyers who use other currencies.

Draghi's comments came as European leaders gathered at a summit to debate the future of the euro. Investors are awaiting any details that may emerge from the gathering as it wraps up Friday.

The developments obscured more signs of an improving U.S. economy. The number of people applying for weekly unemployment benefits fell to the lowest level since late February. Wholesale companies increased stockpiles of autos and other goods in October by the most in five months, government agencies said.

"Europe has stolen the show. It's center stage," HSBC analyst James Steel said.

Gold for February delivery fell $31.40, or 1.8 percent, to finish at $1,713.40 an ounce.

In March contracts, silver fell $1.089 to end at $31.538 per ounce, palladium fell $10.15 to $675.30 an ounce and copper fell 5.6 cents to $3.50 per pound. January platinum fell $27.60 to finish at $1,494.40 an ounce.

In other trading, oil prices fell $2.15 to end at $98.34 per barrel on the New York Mercantile Exchange. Heating oil fell 5.26 cents to $2.9298 per gallon and gasoline futures finished down 2.03 cents at $2.5666 per gallon.

Natural gas rose 3.6 cents to finish at $3.457 per 1,000 cubic feet after the Energy Department said stockpiles dropped more than expected last week.

Wheat for March delivery fell 3.5 cents to end at $5.97 per bushel. March corn rose 7.5 cents to $6.0025 per bushel and January soybeans rose 1.5 cents to $11.325 per bushel.