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Date: Monday 06 Oct 2008

LONDON (ShareCast) - The turmoil engulfing financial markets Monday has spread to commodities.

Crude oil, which approached $150 a barrel in July, now costs less than $90. Investors are betting that the problems plaguing the European banking sector will affect the wider economy and crimp demand for fuel.

Metals prices have also slumped. Copper, zinc and aluminium fell by the maximum permitted level of 4% on the Shanghai futures exchange and look likely to fall further as the exchange catches up with global metals markets following a holiday last week. In London, where copper prices fell by 11% last week, the red metal lost another 4.8% Monday to sit at about $5,270 a tonne.

Platinum prices were well in excess of $2,000 an ounce in March. The precious metal, used to make catalytic converters for cars and therefore vulnerable to a slowdown in car production, is now sitting below $950 an ounce.

However, as is often the case, gold is benefiting from its safe haven qualities while other metals fall and has climbed modestly as investors seek cover from the ongoing turmoil. It gained about 0.7% to sit just below $840 an ounce. Unlike other precious metals, which are mainly used in industry, most demand for gold is as a hedge against economic turmoil rather than for its intrinsic value.

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