Commodity Prices Fall On Global Growth Worries

 

Most commodity prices dropped Monday as worries about global economic growth bubble back to the surface.

Gold, industrial metals and energy products all fell after a closely watched survey showed business confidence fell for a fifth straight month in Germany. The decline suggests that Europe's debt crisis is hurting the region's biggest economy.

About 43 per cent of Germany's exports are sold in other countries that use the euro currency. Growth has slowed across much of the region and some countries have slipped into a recession. The US and China have shown signs of economic weakness as well. The discouraging news from all three regions has dampened enthusiasm over recently announced measures to boost economic growth in the US and Europe. Slower economic growth cuts into demand for such commodities as copper, platinum, palladium and energy products.

Room for correction

Commodity prices rose in the weeks before the announcements by the Federal Reserve and the European Central Bank. Now, metals prices are falling on expectations for softer demand, said Catherine Virga, a base metals analyst with CPM Group. However, she believes metals prices will eventually move higher, but for now there is still more room for a correction. Analysts also say investors are selling commodities for a profit. Some are using that money to buy safer assets such as Treasuries.

Details

Date Posted

September 25 2012