Commodities From Gold to Oil Slump on Fed Outlook, China Crunch

Commodities tumbled as everything from gold to crude oil and copper dropped on concern that the Federal Reserve may phase out stimulus and as China’s cash crunch worsened.

The Standard & Poor’s GSCI Index lost 3 percent to 616.46, capping the biggest drop since December 2011. All 24 raw materials tracked by the gauge declined. Gold futures slid below $1,300 an ounce to the lowest in more than 2 1/2 years, and silver plunged as much as 9.7 percent, while nickel touched the lowest price since 2009.

Chairman Ben S. Bernanke said yesterday that the Fed may start tapering bond purchases that have fueled gains in markets globally. The central bank could end the program next year should risks to the economy abate, he said. Benchmark money-market rates in China, the world’s biggest user of energy and metals, climbed to records, and a private report showed manufacturing shrank at a faster pace, spurring concern that raw-material demand is slowing.

“Investor sentiment has turned negative,” Sterling Smith, a futures specialist at Citigroup Inc. in Chicago, said in a telephone interview. “The idea that the quantitative easing, sooner or later, is going to have to end, that has made inflation-oriented assets, commodity assets, very, very nervous.” (more)

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