Commodities waning on stronger dollar
TEXT OF STORY
Bob Moon: The dollar is up as oil prices continue their slide. It was only a month ago that the cost of a barrel of oil hit an all-time high of $147. Today, it’s down another two bucks to $113, as demand drops and supplies grow.
And thanks to the stronger dollar, the long commodities boom appears to be waning at last, lead this morning by gold. The precious metal fell below $800 an ounce for the first time this year. Ashley Milne-Tyte reports on what’s going on.
Ashley Milne-Tyte: Commodity prices have been on a steep decline lately. Demand for things like oil, copper and wheat has been ebbing as economies slow down.
Jack Scoville of Price Futures Group in Chicago says many investors had turned to commodities because the dollar had been so weak, causing fears about inflation. But the dollar’s recent rally has changed that.
Jack Scoville: There is less need to hold commodities in your portfolio, so you’re seeing some liquidation, and gold being kind of a bellwether commodity for the economy is seeing the selling as much as any commodity around that you can find.
He says commodity prices got too high and the market was due for a correction. But he says this is just a pause. As prices fall to more reasonable levels, he predicts demand will once again pick up, and the whole cycle will begin again.
In New York, I’m Ashley Milne-Tyte for Marketplace.
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