Stronger dollar, weak data tugs at commodities
NEW YORK — Commodities prices fell broadly Thursday as investors abandoned risky assets and fled for the safety of the dollar and government debt.
More mixed data on the economy signaled that the recovery will be moderate and slow at best, leading investors to dump assets like commodities that depend on a healthy economy to drive demand.
On the New York Mercantile Exchange, gold for December delivery fell $8.60 to $1,000.70 an ounce, while December silver dropped 21.8 cents to $16.44 an ounce. Platinum slipped 1 percent, and palladium lost 2.1 percent.
December copper futures fell 8.2 cents to $2.7370 a pound.
The selling came after the Institute for Supply Management said its index of manufacturing activity in September slipped to 52.6 from 52.9 in August, well below what analysts were expecting.
Meanwhile, the Labor Department said the number of new claims for jobless benefits rose more than expected last week to 551,000 after three straight weekly drops.
Those reports overshadowed sharp increases in home sales and consumer spending in August.
Major stock indicators fell sharply on the day’s news, including the Dow Jones industrials, which lost 203 points, its biggest one-day drop since early July.
The mixed reports rattled investors already nervous ahead of the Labor Department’s September employment report on Friday, the month’s most important piece of economic data.
After sending stocks and commodities surging this year on hopes of a strong economic recovery, investors have recently put the brakes on buying and are selling some of their riskier holdings in favor of more safe-haven assets like the dollar and Treasurys.
A stronger dollar exacerbates the decline in commodities because it weakens their appeal to foreign investors. On Thursday, the U.S. dollar index, which measures the greenback against a basket of other currencies, rose 0.7 percent.
In other Nymex trading, natural gas prices sank nearly 8 percent after the government reported that demand has weakened so much that the U.S. is now storing more natural gas than at any other time on record. Natural gas for November delivery lost 37.5 cents to settle at $4.4660 per 1,000 cubic feet.
Gasoline for November delivery added less than a penny to $1.7579 a gallon, and heating oil lost a half cent to $1.8274 a gallon.
Bucking the trend, crude prices added 21 cents to $70.82 a barrel.
On the Coffee, Sugar & Cocoa Exchange, March sugar prices lost 0.75 cent to 24.64 cents a pound and December coffee fell 1.1 cents to $1.2670 a pound.
Grain prices also fell. Corn for December delivery fell 3.5 cents to $3.4050 a bushel on the Chicago Board of Trade, while November soybeans gave up 9 cents to $9.18 a bushel.
December wheat futures lost 4.75 cents to $4.5275 a bushel.
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