Commodities dropped, heading for a fourth weekly loss, as oil and grains tumbled on concern slower economic growth will curb demand. Gold advanced to a record for the second day as investors sought a haven.
The Standard & Poor’s GSCI Index of 24 commodities fell as much as 1.7 percent to 624.23, the lowest since Aug. 10, and stood at 629.32 by 10:48 a.m. in London. The gauge is down 2.1 percent this week. Oil declined 2.4 percent to $80.39 a barrel in New York. Gold climbed 2.4 percent to $1,867.95 an ounce.
Commodities have plunged 16 percent from the April high on concern the sovereign-debt crisis is threatening global growth and demand for raw materials. They are little changed this year as the MSCI All-Country World Index of equities tumbled 12 percent. Consumption of oil shows no sign of a recession, Goldman Sachs Group Inc. said.
“Commodity demand remains strong,” said James Bruce, a fund manager at Perpetual Ltd., which manages about $3.5 billion in natural-resource equities. “Asian economies, which consume about half of commodities, continue to perform well as the western world slows,” he said by phone from Sydney.
Citigroup Inc. cut its forecasts for U.S. growth after data yesterday showed jobless claims rose and Philadelphia-area manufacturing shrank by the most since 2009. The U.S. is the largest oil consumer and second to China in use of copper.
‘Critical Mass’
“The critical mass of bad news has clearly now been reached,” Commerzbank AG said in a report today. “The situation should only change on a lasting basis once the news improves or governments and central banks do something to restore more confidence on financial markets.”
Lars Frisell, chief economist at Sweden’s financial regulator, said it won’t take much for interbank lending to freeze and the Wall Street Journal said regulators were scrutinizing the U.S. operations of Europe’s largest lenders.
U.S. initial jobless claims climbed by 9,000 to 408,000 in the week ended Aug. 13, topping the median estimate of economists surveyed by Bloomberg for a rise to 400,000. The Fed Bank of Philadelphia’s general economic index unexpectedly plunged to minus 30.7, the lowest level since March 2009.
“The recent U.S. oil demand numbers do not support a view that the economy has fallen back into recession,” said David Greely, a Goldman analyst, in a report dated yesterday. Consumption in the past three weeks has risen to the highest level for this time of year since before the 2008 economic crisis, he said.
Gold traded at $1,863.25 an ounce after gaining to a record. Mounting concern about sovereign debt and slower growth has spurred investors to seek the perceived safety of bullion.
Corn, Copper
“Gold’s role as a safe haven will strengthen amid a slowing economic recovery, mounting debt-rollover needs in Europe and sharp market corrections,” said Cai Hongyu, an analyst at China International Capital Corp., the country’s biggest investment bank.
Corn for December delivery on the Chicago Board of Trade dropped as much as 1 percent to $7.0625 a bushel and traded at $7.09 a bushel. Futures plunged 1.7 percent yesterday, the most since Aug. 8.
Copper for delivery in three months gained 0.3 percent to $8,794.75 a metric ton, reversing a decline of 0.8 percent.
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