SINGAPORE: Oil, copper and corn tumbled to new lows on Wednesday as the worst financial crisis since the Great Depression rocked global financial markets, sending investors scurrying towards the relative safety of gold.
Oil prices fell below $87 a barrel in Asia on investor concerns that the credit crisis that began in the US will trigger a prolonged global economic slowdown and hurt crude demand.
Japan's Nikkei average posted its biggest one-day drop since the 1987 stock market crash, helping send oil down by more than $3 to an eight-month low and snuffing out early rallies in industrial metals and grains.
Oil, base metals, grains and rubber have taken a beating in recent months as the global financial crisis threatens to slash demand.
"The only commodity that looks like it could be well supported in this environment will be gold as a safe haven investment," said Mark Pervan, ANZ's senior commodity analyst.
"Oil particularly is vulnerable because it is the most exposed commodity to the US economy," he said.
Crude oil fell as low as $86.80 a barrel as concerns the global financial crisis will curb demand for fuels overshadowed signs that producer group OPEC was considering a supply cut.
Gold was trading at $899.30 an ounce, up $12.70 from New York's notional close on Tuesday - within sight of a two-month high of $920 an ounce hit on September 29.
An increase in holdings in the world's largest gold-backed exchange-traded fund, the SPDR Gold Trust NYS, showed renewed investor interest in gold after prices tumbled to an 11-month low of $736 in September.
"The downside risks to gold seem mitigated by the strength of physical demand for investment-grade jewellery and small bars in the important gold markets of the Middle East, India, China, and other parts of Asia," said Jeffrey Nichols, managing director of American Precious Metals Advisors.
Source : Economic Times
