By SANDY SHORE
Commodity prices fell across the board Wednesday as concerns about Europe's economic health bubbled back to the surface.
The declines occurred after Spain said that the amount of bad loans at its banks rose to an 18-year high of 8.15 percent. That reversed Tuesday's broad gains, which occurred on optimism about the U.S. economy.
Spain's problems have added to ongoing worries about global economic growth because China's economy also is slowing. Investors question whether slower growth will lead to weaker demand for raw materials including oil, copper, grains and soybeans.
The next key indicator for Spain will occur Thursday when the country holds a 10-year bond auction.
In addition, the dollar grew stronger against other currencies. Since commodities are priced in dollars, a stronger dollar makes them more expensive for traders who use currencies such as the euro, the Japanese yen and the Swiss franc.
Gold for June delivery fell $11.50 to end at $1,639.60 per ounce, May silver dropped 18.7 cents to $31.487 an ounce, May copper fell 1.6 cents to $3.631 per pound, July platinum decreased $5.50 to $1,579.20 per ounce and June palladium ended down $4.70 at $657.25 per ounce.
In other trading, cotton prices jumped nearly 3 percent after China's crop estimates were smaller than expected, Country Hedging LLC analyst Sterling Smith said. Cotton for May delivery rose 2.5 cents to end at 91.93 cents per pound.
Like other commodities, cotton could be hurt if Europe's economy continues to struggle because consumers typically use discretionary dollars to buy products made from the fiber. A slower economy could prompt consumers to skip a new shirt or other clothing to pay for food and fuel, Smith said.
July wheat dropped 4.5 cents to finish at $6.1575 per bushel, corn fell 15 cents to $6.0175 per bushel and soybeans ended down 18 cents at $14.135 per bushel.
In other trading, oil prices fell after the government said inventories expanded more than analysts expected last week while demand for both oil and gasoline fell.
Benchmark oil declined $1.53 to finish at $102.67 per barrel on the New York Mercantile Exchange. Heating oil decreased 0.84 cent to $3.1182 per gallon, gasoline futures fell 3.13 cents to $3.2027 per gallon and natural gas was unchanged at $1.951 per 1,000 cubic feet.
Copyright 2012 The Associated Press.