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Commodities: Oil and gold tumble again

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Date: Friday 21 Mar 2008

LONDON (ShareCast) - Commodity prices turned lower Thursday as investors rediscovered their faith in equities and the US dollar.

Gold fell almost 3% to add to Wednesday’s steep decline. The spot price fell to just above $900 in New York having been above the $1,000 mark on the first day of the week. Gold for April delivery tumbled $25.30 to $920 an ounce as the US dollar rallied – dollar strength is usually bearish for gold.

Other metals also fell out of favour, with copper sliding 1.7%, palladium dipping 3.9% and platinum down 0.5%. May silver dived 8.6% to $16.85 an ounce.

Oil was similarly stuck in reverse gear, sliding below $100 a barrel at one point before recovering. Crude for May delivery fell $0.70 to $101.84, almost $10 below its highest value of the week on March 17.

Fears of a reduction in demand caused by a US recession were cited as a reason for the fall, though, as with gold, the resurgent US dollar did not help sentiment. Options traders on Nymex appear to be putting their money on oil sliding below $95 with some market observers forecasting a continued slide to the $90 level.