The havoc caused by the US credit rating downgrade last week amidst the debt crisis in Europe pushed all commodities sharply lower. Fears that the US and Europe will not be able to handle their mounting debt issues resulted in rampant selling of all risky assets, pushing the price of gold nearly 6% higher. Crude oil fell to an eight-month low. Industrial metals declined on fears of slowing demand from the US and China. Copper was the biggest loser.
Gold With the debt crisis in Europe and rising fears of a recession in the US, many believe that a repeat of 2008 is inevitable for the financial markets. Owing to the complete lack of assurance of returns from risky assets, investors amassed gold sending the precious metal to a record $1781. Gold prices have even surpassed the traditionally more expensive platinum. With uncertainty in markets, analysts expect gold to touch $2500 before the end of 2011. Technically, however, analysts believe a small correction is on the cards. Despite the sharp rise, any correction would be a good opportunity to buy given the ongoing turmoil.