Most commodities plummet on economy fears; gold gains

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While investors wait to see whether the battered stock market can hold above last year’s lows, the commodity market already has plunged into new bear territory.

The Reuters/Jefferies CRB index of 19 major commodities had fallen to 205.33 at about 11:30 a.m. PST, down 3.7% for the day and the lowest since 2002. The index’s closing low in 2008 was 208.60 on Dec. 5.

Last year the CRB lost 36%, rivaling the 38.5% plunge in the Standard & Poor’s 500 stock index. Investors who had hoped that commodities would offer a place to hide from the stock market’s woes hadn’t counted on the global economy falling off a cliff.

Today, traders are bailing again on oil, copper, soybeans and most other commodities on expectations that the global recession will mean declining demand for raw materials in general this year.

‘Fear of across-the-board demand destruction is keeping these markets under pressure,’ said William O’Neill, a veteran commodities analyst at Logic Advisors in Upper Saddle River, N.J.

Near-term crude oil futures were at $34.89 a barrel, down $2.62 for the day, although the price held above last week’s low of $33.98.

Copper, which had rallied modestly in January, dived 7.4% for the day after losing 4.5% last week. Wheat, aluminum, heating oil, coffee and sugar also are getting hammered.

But what’s bad for most commodities is a boon for precious metals: Gold, silver and platinum have surged, adding to their gains of recent weeks, as some investors turn to those classic havens from global financial and economic upheaval.

Gold futures jumped $28.80, or 3.1%, to $971 an ounce today -- the highest since the metal reached $978 in mid-July, and knocking on the door of the $1,000 mark, which gold only briefly traded above last March.

-- Tom Petruno