Gold prices, commodities fall on China weakness

Gold prices drop more than $20 an ounce. Copper, oil, and soybean prices also decline as concerns mount about an economic slowdown in China. Gold prices close below $1,650 an ounce.

Commodity prices fell broadly Tuesday as more evidence of China's slowing economy renewed concerns about future demand for everything from oil and copper to soybeans and gold.

Housing prices dropped in 45 Chinese cities in February, partly because of government measures to ease property speculation. China also raised the price of gasoline for the second time in two months, which could diminish demand.

BHP Billiton Ltd., the world mining giant, also predicted that China will not consume much more iron ore in 2020 than it does now. Demand increased more than fivefold between 2000 and 2012.

China has been a major buyer of iron ore, which is used in steelmaking, as it has ramped up infrastructure projects like roads, airports, factories and housing.

News that affects the pace of China's growth can have a significant impact on commodity prices because China is a major importer of raw materials to drive the world's second-largest economy.

China's rapid growth has slowed in the past year because of government measures designed to prevent the economy from overheating. Its economic growth was 8.9 percent in the final quarter of 2011, compared with double-digit expansion the previous year. The government has set a growth target of 7.5 percent for 2012.

The developments from China gave some commodities investors a chance to sell holdings for profits, Kingsview Financial analyst Matt Zeman said.

"I don't think we're going to see any real broad sell-off," he said. "I think that people are going to look more at these little pullbacks as buying opportunities than anything else."

In metals trading, the price of copper was held down by a mixed housing report. The Commerce Department said builders broke ground on fewer homes in February but obtained more permits to build homes later in the year.

Copper for May delivery fell 7.85 cents, or 2 percent, to finish at $3.8305 per pound, and silver fell $1.121, or 3.4 percent, to $31.834 per ounce. April platinum fell $30.40 to finish a $1,654.30 an ounce and June palladium dropped $10.55 to $697.05 per ounce.

April gold fell $20.30 to end at $1,647 per ounce. Gold prices have fallen nearly 8 percent since the end of February.

Oil prices fell on concerns about China's economy and a promise from Saudi Arabia to fulfill any shortfalls in global oil supplies that may occur from a standoff over Iran's nuclear program.

Benchmark oil fell $2.48 to finish at $105.61 per barrel on the New York Mercantile Exchange. Heating oil fell 2.46 cents to end at $3.2367 per gallon, gasoline futures declined 0.47 cent to $3.3631 per gallon and natural gas ended down 1.6 cents at $2.335 per 1,000 cubic feet.

In May agricultural contracts, wheat fell 9.75 cents to end at $6.425 per bushel, corn dropped 16 cents to $6.475 per bushel and soybeans finished 21.5 cents lower at $13.45 per bushel.