Commodity falls – views from around the web

23rd September 2011

It's not just shares but commodities that have had a grim week. CNN is fearful about what is happening to copper prices in particular. But most other metals including silver, nickel and the traditional safe haven asset gold have also seen falls. Oil despite a more mixed outlook in terms of the balance of supply and demand is also down.

Mindful Money takes a look at the views of a range of websites.

Talking of copper, CNN writes: "In the past two months alone, prices have plummeted more than 20 per cent, putting copper into bear market territory, which is pretty much a blinking red light for the global economy.

And it quotes Paul Simon, chief investment office of the Tactical Allocation Group saying: "We're seeing a knee-jerk reaction, as if the world is coming to an end."

The Australian reports on the plunging oil markets and quotes two analysts.

Goldman Sachs says the market is trying to reconcile falling global oil inventories with the threat of future demand declines.

Goldman Sachs energy analyst David Greely writes: "Global crude oil markets continue to be torn. US crude oil inventories are approaching pre-recession levels and inventories outside the United States are already there."

It also notes that Carl Larry, the director of research and derivatives at Blue Ocean Brokerage, said he believes oil will hold at $US80-a-barrel level and recover, since supplies are tight even as demand is slack, and as traders lock in the low price through derivative hedges.

Gold, so often a safe haven when markets are turbulent is also down. Reuters reports on market falls this week.

U.S. gold is down to $1,722.3, its lowest since August 25 with a 3.8 per cent weekly loss likely. Traders blamed distress selling of investors who have grown increasingly uncomfortable with the turmoil on the credit market. It gives an unnamed Singapore trader's view.

"More and more it seems that the commodity market is dependent on cash being free and easy. And cash isn't free and easy."

"There's a lot of concern over holding exposure to very volatile assets, when funding is so difficult and people generally are more inclined to be in cash."

Business Week reports on the worst week for commodities in four months.

It quotes William Adams, head of research at the London- based saying: "There is no doubt still plenty of room for base metal prices to fall. Given the extent of the drop in the past 36 hours and in the weeks before, there may well be some consolidation and potential for a rebound."

More from Mindful Money:

The Commodities Bubble: Explained

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