Commodities fell the most since June on mounting prospects for a diplomatic solution to Syria’s chemical attacks, avoiding military action and easing concern that oil shipments from the Middle East will be disrupted.
The Standard & Poor’s GSCI Spot Index of 24 raw materials dropped 1.5 percent to settle at 647.13 at 3:59 p.m. in New York, the biggest slide since June 20. Earlier, the index touched 644.41, the lowest since Aug. 23. Silver led the decline, falling as much as 3.7 percent, gold dropped the most in two months, and crude oil slid the most in three weeks.
Commodities reached a six-month high on Aug. 28 as the U.S. considered a military strike against Syria for its alleged use of chemical weapons against civilians. Raw materials declined amid reports that Bashar al-Assad’s government agreed to a Russian plan to surrender its chemical weapons.
“It appears that imminent conflict has been pulled back with the plan between Russia and Assad,” Walter “Bucky” Hellwig, who helps manage $17 billion of assets at B&T Wealth Management in Birmingham, Alabama, said in a telephone interview. “It looks like the war premium is coming out of gold and oil, and that’s knocking the index lower.”
France said it will submit a proposal to the United Nations to confiscate Syria’s chemical weapons. Interfax reported that Assad’s government accepted the plan. President Barack Obama, who is scheduled to speak about his intentions on Syria at 9 p.m. in Washington, said yesterday that Russia’s motion is a “potentially positive development.”
West Texas Intermediate crude oil for October delivery dropped 1.9 percent to settle at $107.39 a barrel on the New York Mercantile Exchange, the biggest slump since Aug. 20.
Gold futures for December delivery declined 1.6 percent to close at $1,364 an ounce on the Comex in New York, the largest drop since July 5. Silver futures for December delivery slumped 3 percent to $23.016 an ounce on the Comex.
“The seeming outbreak of peace for the moment is obviously providing some relief to crude oil and leading to some liquidation in gold,” Sterling Smith, a futures specialist at Citigroup Inc. in Chicago, said in a telephone interview. “When there’s less saber rattling in the Middle East, the crude-oil market doesn’t need to hold as much premium. Investors are less inclined to own gold.”