Commodities fell the most in a week on concern that Greece’s deepening financial crisis will threaten global economic growth and demand for energy and metals.
The Bloomberg Commodity Index of 22 raw materials lost as much as 0.9 percent, the most since June 19. Energy products and industrial metals led declines, with crude oil dropping to a three-week low and nickel slumping to the lowest since 2009.
Greece shut its banks and imposed capital controls in a bid to avert the collapse of its financial system, increasing the risk that it will be forced out of the euro. After failing to reach a deal with creditors, the country will vote in a July 5 referendum on proposals needed to restore bailout aid. The dollar rose to a four-week high versus the euro, making commodities priced in the greenback more expensive for holders of other currencies.
“Commodities are under pressure today due to rising risk aversion,” Carsten Fritsch, an analyst at Commerzbank AG, said by phone from Frankfurt. “More risky assets are being sold. You see it in the stock markets and likewise in energy prices and metals prices.”
The Bloomberg Commodities Index fell 0.7 percent to 100.42 by 12:16 p.m. London time. The gauge still headed for a 2.3 percent gain this quarter, the most since the first three months of 2014. The measure is down 3.7 percent this year.
Optimism that Greece and its creditors would reach a deal has vanished just before the June 30 expiry of the current bailout and a $1.7 billion payment due to the International Monetary Fund. German Chancellor Angela Merkel and French President Francois Hollande signaled they’ve reached the limits of their ability to safeguard Greece, offering the Greek government no further concessions to step back from the brink.
West Texas Intermediate for August delivery dropped as much as 2.7 percent to $58.04 a barrel on the New York Mercantile Exchange. Prices also fell as diplomats in Vienna came close to clinching a deal to curb Iran’s nuclear program, which may boost oil supplies from the country if international sanctions are lifted.
Nickel for three-month delivery retreated as much as 5.5 percent to $11,770 a metric ton on the London Metal Exchange, the lowest since May 2009. Aluminum, lead, tin and zinc declined, while copper was little changed.
Gold rose as much as 1.1 percent in London, before paring gains as a strengthening dollar overshadowed the appeal of the precious metal as a haven. It was last up 0.3 percent at $1,178.83 an ounce, according to Bloomberg generic pricing.
Wheat and corn prices rose on the Chicago Board of Trade amid concern that wet weather in the U.S. and dryness in Europe will hurt crops.