Commodities fall on slower China growth forecast
Prices for a wide range of commodities fell Monday after a new forecast of slower growth in China ramped up worries about the global economy.
The World Bank's lowered expectation for China was one of three issues that prompted investors to sell riskier assets on a day when volumes were light because of the Columbus Day holiday.
The bank revised its economic growth forecast for China to 7.7 percent from 8.2 percent, which was issued in May. It said there is a risk of a more pronounced slowdown in China than currently expected, citing weak global demand. The bank also cut its forecast for developing Asia-Pacific economies to 7.2 percent from its May forecast of 7.6 percent.
China, which is the world's second largest economy, imports large quantities of raw materials, from copper and other industrial metals to oil and agricultural products. Slower growth means demand likely will fall for commodities.
China's economic slowdown occurred as the government tried to cool an overheated economy. Its growth was 7.6 percent at the end of the second quarter, and some officials have predicted it will slow even further before it begins to recover.
Meanwhile, European finance ministers from countries are meeting as unrest continues in Greece and Spain over austerity cuts imposed to try to control debt problems. The ministers are expected to review recent developments in the region's debt crisis.
Traders are waiting for more details about efforts in both countries, along with the broader region, analysts said.
The global economic worries caused the dollar to strengthen against most currencies. Because commodities are priced in dollars, a stronger dollar makes them more expensive for traders who use other currencies.
In December contracts, gold dropped $5.10 to end at $1,775.70 per ounce, silver fell 55.5 cents to $34.017 per ounce, copper decreased 6 cents to $3.718 per pound and palladium ended down $6.25 at $656.95 per ounce. January platinum finished down $8.40 at $1,698.80 per ounce.
Most energy contracts finished lower. Benchmark crude fell 55 cents to $89.33 per barrel, heating oil declined 1.16 cents to $3.1443 per gallon and wholesale gasoline dropped 5.94 cents to $2.8931 per 1,000 cubic feet. Natural gas rose 0.7 cent to $3.403 per 1,000 cubic feet.
In other trading, key agricultural contracts were mixed ahead of the U.S. Agriculture Department's updated forecasts on supplies and demand, which is scheduled to be released later this week.
December wheat rose 3.5 cents to end at $8.61 per bushel, December corn fell 6 cents to $7.42 per bushel and November soybeans dropped 0.5 cent to $15.51 per bushel.
