Producers of metals, grains and other raw materials fell as a reassessment of the likelihood of Federal Reserve rate cuts caused a rout in precious metals.
The U.S. dollar rose sharply against rivals, weighing on the value of dollar-denominated commodities, as the inflationary risks of the war in Iran were seen as diminishing the chances of a Fed rate cut in the foreseeable future.
Dollar-sensitive silver futures plunged 6.1% to $82.92 an ounce. Similarly, gold futures fell 3.5% to $5,107.40 a troy ounce.
Lorenzo Di Mattia, manager of hedge fund Sibilla Global Fund, said he was betting against gold, silver and platinum because the recent run-up in prices had changed the nature of precious-metals investing. Precious metals, at these levels, trade partly in line with risk assets, but still have some of their former safe-haven role, Di Mattia said.
If the Middle East war continues to escalate, that could cause further "risk-off" selling of precious metals alongside other commodities and securities, Di Mattia said. A de-escalation of the war could also weigh on precious metals as demand for investment safe havens falls, the hedge-fund manager said.
Norwegian aluminum producer Norsk Hydro said its Qatari smelter was shutting down after its joint-venture partner stopped supplying gas amid attacks from Iran.
Joint venture partner QatarEnergy was forced to stop LNG production due to the risk of attack from Iran. The Qatari company said it halted production of some downstream products in the country, including aluminum, urea, polymers and methanol.
Write to Rob Curran at rob.curran@dowjones.com
(END) Dow Jones Newswires
03-03-26 1719ET
