Commodities extended declines to a five-year low on speculation the strengthening dollar and signs of slowdown in China will curb demand for raw materials.
The Bloomberg Dollar Spot Index has climbed for the past five weeks and Chinese data from industrial production to manufacturing was below economists forecasts.
"We're seeing a kind of mental capitulation by investors," Jon Bergtheil, an analyst at Citigroup Inc in London, said by telephone on Monday. "The fundamentals are getting worse. The strong dollar because commodities are measured in dollars is normally bad news for commodities."
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The Bloomberg Commodity Index dropped 0.5 per cent to 118.8843 by 8:55 am in New York. Earlier on Monday it had traded at the lowest since July 17, 2009. Nickel led declines with a 2.8 per cent drop, and cotton retreated 2.3 per cent.
Gold fell as much as 0.6 per cent to $1,208.80 an ounce, the lowest since January 2, silver sank to a four-year low and platinum dropped to the lowest this year. Brent crude declined 0.8 percent to $97.59 a barrel and copper slumped 1.6 per cent to $3.0415 a pound.
Commodities are 12 per cent lower this quarter, set for the biggest such loss since the financial crisis in 2008. China's Finance Minister Lou Jiwei said in a statement on Sunday that growth in Asia's largest economy faces downward pressure.
"We are looking at a downturn right now as China continues to disappoint," Justin Smirk, a senior economist at Westpac Banking Corp., said on Monday by phone from Sydney. "It's about the uncertainty that people are worried about."
A preliminary reading on the HSBC Holdings Plc and Markit Economics China Purchasing Managers' Index for September will probably show a drop to 50 from 50.2 in August. A reading above 50 shows expansion. The report is due on Tuesday.
