A sharp upturn in the value of the dollar sent prices for oil, gold and other commodities sharply lower.
The dollar's spike against the euro came at midmorning Tuesday after Egan Jones, a small credit ratings agency, cut its rating on Spanish government debt. Even though the agency isn't as well-known as Moody's or Standard & Poor's, the report was enough to rekindle worries that Spain's financial troubles could deepen.
The euro slid to a 22-month low against the dollar. When the dollar rises in value, it instantly reduces demand for commodities like oil and gold because they become more expensive for investors who use other currencies such as euros.
Unlike global markets for stocks, bonds and other financial securities, which trade in a variety of currencies, most commodities are priced only in dollars even though they're produced and consumed in countries around the world. That makes their prices highly sensitive to changes in the value of the dollar. A 1 percent move up in the dollar versus the euro, for example, makes every commodity priced in dollars 1 percent more expensive for any investor using euros, which could discourage buying.
Gold dropped sharply after the dollar rose. The June contract gave up an early gain of about $10 an ounce to close down $20.20 at $1,548.70 an ounce. Silver for July delivery fell even more, shedding 2 percent or 59.5 cents to settle at $27.791 an ounce.
Other metals ended higher but only after giving up much of their gains from earlier in the day. July copper settled up 1.4 cents to $3.462 an ounce. Platinum for July delivery rose $1.60 to $1.428.10. Palladium for September delivery rose $14.20 to $606.05 an ounce.
Oil dropped sharply after rising earlier in the day, ending with a loss of 10 cents at $90.76 a barrel. In addition to the rise in the dollar, energy traders were also anticipating less demand for oil if Europe's economy gets even weaker than it already is. Oil has been dropping steadily from $106 at the beginning of May because of signs that global economic growth is slowing.
In other energy trading, natural gas lost 13.9 cents to end at $2.429 per 1,000 cubic feet. Natural gas has lost about 22 cents in the past two days.
Heating oil lost 2 cents to finish at $2.8088 per gallon, while wholesale gasoline rose 1.36 cents to finish at $2.9065 per gallon.
Grain prices fell, but beans rose. Wheat lost 23.25 cents to $6.5675 a bushel and corn lost 16 cents to $5.625 a bushel. Soybeans edged up 4.75 cents to $13.8675 a bushel.