SINGAPORE (REUTERS) - Most commodity prices suffered falls on Monday, compounding worries about oversupply, after Greece rejected terms for a bailout and top consumer China unleashed emergency measures over the weekend to prevent a full-blown stock market crash.
Brent crude fell below US$60 per barrel on Monday, to levels last seen in April, reacting to worries about the global economy as the euro slid on news Greeks had rejected terms for a bailout, putting in doubt its continued place in the single currency.
"As far as Greece is concerned, if we are going to see a drawn-out period of uncertainty, that may be negative for demand. But closer to hand is the possibility of a stronger U.S. dollar, which a negative for oil," said Ric Spooner, chief analyst at CMC Markets in Sydney.
A strong dollar puts pressure on oil markets as it makes fuel more expensive for countries using different currencies.
Adding to falls in Asia, commodities were sucked into China's market turmoil that has seen shares fall by as much as 30 per cent since June amidst an economy that is growing at its slowest pace in a generation, despite a bounce on Monday following the emergency measures at the weekend.
Chinese steel prices are now at their lowest since the peak of the global financial crisis in 2009, with futures down 70 per cent to around 2,000 yuan per tonne.
Iron ore - steel's main raw material - has fallen more than 15 per cent since mid-June to below US$55 a tonne.
Oil, iron ore and coal are already suffering from oversupply, with major producers like Australia (coal and iron ore), the Middle East, Russia and the United States (oil), all seeing near record output just as demand slows.
But with economic uncertainty rising, gold benefited from its safe-haven status. Prices of the precious metal are up by almost 1 per cent since the beginning of July to around $1,168 per ounce.
"We think that the short-term uncertainty generated by the Greek vote will likely benefit gold and suspect that we could see more appreciation over the next few days. However,... lower oil prices and a stronger dollar should keep gold's advance somewhat in check," said INTL FCStone analyst Edward Meir.