Oil, gold and other major commodities fell sharply on Thursday, capping their steepest weekly drop in a half-century, as investors fled what many had believed to be the last safe haven in turbulent markets.Oil tumbled 6.9 percent in two days of trading, and most other commodities fell by 7 percent or more in that period — including a precipitous 15 percent drop for wheat. For the four-day week ending Thursday, an index created by the Commodity Research Bureau in Chicago fell 8.3 percent, the sharpest one-week decline since the index began in 1956.This fall is good news, at least for the consumers, as this would lead to low inflation.But what is the cause of this downfall?In the previous weeks, we have seen that whenever dollar falls, investors switch over to commodities and as a result commodity prices go up with fall in dollar price.Some analysts think last interest cut of .75% is less than the market expectation, that took dollar higher, which finally resulted in fall in commodity price.
Other think that investors are worried that recession is round the corner, with recession demand for commodity would fall and the result is the recent fall of coomodity prices. Gold, which had recently crossed the $1,000-an-ounce mark after a huge run-up, settled on Thursday at $920 in New York trading. Oil intermittently straddled the $100 mark before settling down 2.5 percent, at $101.84 a barrel(but oil at about $102, is it really a collapse?).According to Adam Robinson, an energy analyst at Lehman Brothers, since the start of the year, demand for oil in the United States has fallen 2.4 percent, or 510,000 barrels a day, compared with the same period last year.
In the last four weeks, that drop has accelerated, according to figures compiled by Lehman Brothers. Some reports also indicate a softening of demand for precious metals. “We had a battery of data showing a real erosion in jewelry demand in India and China,” Mr. Steel said. (From New York Times)
Other think that investors are worried that recession is round the corner, with recession demand for commodity would fall and the result is the recent fall of coomodity prices. Gold, which had recently crossed the $1,000-an-ounce mark after a huge run-up, settled on Thursday at $920 in New York trading. Oil intermittently straddled the $100 mark before settling down 2.5 percent, at $101.84 a barrel(but oil at about $102, is it really a collapse?).According to Adam Robinson, an energy analyst at Lehman Brothers, since the start of the year, demand for oil in the United States has fallen 2.4 percent, or 510,000 barrels a day, compared with the same period last year.
In the last four weeks, that drop has accelerated, according to figures compiled by Lehman Brothers. Some reports also indicate a softening of demand for precious metals. “We had a battery of data showing a real erosion in jewelry demand in India and China,” Mr. Steel said. (From New York Times)
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