Feb. 17 (Bloomberg) -- Commodities plunged to their lowest level since June 2002, led by energy and industrial metals, on mounting signs the global recession is deepening and that demand for raw materials will decline further.
The Reuters/Jefferies CRB Index of 19 prices dropped for the sixth straight day, the longest slump since December. The index touched 206.27, the lowest since June 26, 2002, and has slipped 10 percent this year. Crude oil fell as much as 7.4 percent today, and copper declined as much as 6.7 percent.
Manufacturing in New York contracted in February at the fastest pace on record, and Japan’s economy shrank in the fourth quarter at an annualized rate of 12.7 percent, the most severe contraction since 1974, government reports showed today. In 2008, the CRB index fell 36 percent, the most since its debut five decades ago, as recessions hit the U.S., Europe and Japan.
“When the economic numbers started coming out this morning, whatever hope was left in most commodity markets got pretty well deflated,” said Peter Sorrentino, who helps manage $15.5 billion at Huntington Asset Management in Cincinnati. “People are waiting to see the economy begin to pick up, which won’t happen until late this year. Until then, people will continue trading on emotion.”
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Gold Rallies
Precious metals were the lone commodity gainers. Gold jumped to the highest price since July as equity markets plunged and on speculation that low interest rates and government spending will devalue currencies, boosting the appeal of bullion as an alternative. Silver and platinum also rose.
“People will continue to go for the precious metals now as the safe haven,” said Groenwegen of Gold Arrow. “This is the environment that is good for gold.”
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