Commodities Dive on Stronger Dollar

NEW YORK — Commodities prices plummeted Thursday, with precious metals, agriculture and crude oil futures all falling sharply as a rebounding dollar led to heavy selling of hard assets.

The dollar edged higher against the 15-nation euro Thursday, buoyed by the Federal Reserve's three-quarter point interest rate cut earlier this week. The cut, which disappointed investors hoping for a full point reduction, sent the greenback higher, and in turn, touched off a broad commodities sell-off. A flurry of fund-selling heading into the long holiday weekend also pushed prices lower; commodities markets will be closed for Good Friday.

Agriculture futures were among the hardest hit, with wheat closing below $10 a bushel on the Chicago Board of Trade for the first time in more than six weeks. The May contract dropped 86.5 cents Thursday to settle at $9.87 a bushel, after earlier falling as low as $9.77.

Other agriculture futures also traded lower. Soybeans for May delivery fell the 50-cent daily limit to settle at $12.07 a bushel on the CBOT, while May corn futures dropped 19.75 cents to settle at $5.075 a bushel.

The dollar's long decline against the euro and other currencies had contributed to commodities' months-long rally. Conversely, signs of strength in the U.S. currency has investors turning around and selling.

"It's just people getting out of positions. You've got some risk aversion and there are some hedge funds that need to liquidate, and (agriculture) is one of the first things they throw off the boat," said Elaine Kub, analyst with DTN in Omaha, Nebraska.

In precious metals markets, gold continued its downward slide, falling to a one-month low as the stronger dollar at least temporarily eased inflation concerns and prompted investors to shift funds out of hard assets.

Gold for April delivery shed $25.30 to settle at $920 an ounce on the New York Mercantile Exchange, after earlier falling as low as $904.70 — its lowest level since Feb. 19. On Wednesday, gold dropped 5.9 percent, its biggest one-day loss in nearly two years and almost $100 less than its all-time high of $1,033.90, reached on Monday.

"The bottom line is, people are selling stuff, and gold and commodities are getting slaughtered," said John Reade, analyst with UBS AG in London.

Other precious metals also traded sharply lower. May silver plunged to a six-week low, losing $1.595 to settle at $16.85 an ounce on the Nymex. May copper, meanwhile, fell 6 cents to settle at $3.5735 a pound.

Despite gold's apparent correction, many analysts expect the metal to rebound, noting that a generally weak dollar, record-high crude prices and continued credit market turmoil should spur buying of the metal as an alternative investment. In addition, the Federal Reseve is expected to continue its interest rate-cutting campaign, likely adding to pressure on the dollar.

"History has shown that corrections usually follow a path of being fast, furious and short-lived," said Scott Meyers, analyst with Pioneer Futures in New York. "By no means do I think this is the beginning of a bear market for gold."

In energy markets, crude oil future extended their loss amid worries about the economy and the stronger dollar.

Light, sweet crude for May delivery fell 70 cents to settle at $101.84 a barrel on the Nymex, after falling as low as $98.65 earlier. It was the first time a front-month oil contract fell below $100 since March 5.

Other energy futures traded mixed Thursday. April heating oil futures shed 3.95 cents to settle at $2.9772 a gallon on the Nymex, while April gasoline futures rose 4.48 cents to settle at $2.6051 a gallon on the Nymex.

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