The price of crude oil and gold fell nearly 10% in less than 36 hours on Wednesday and Thursday, backfiring on investors who were using commodities as a hedge against inflation.
In the last few months, the price of gold and oil has gone nowhere but up, while the U.S. dollar has dropped. Whether they were hoping to make a short-term profit or looking for a safe haven, investors flooded the commodities markets and quickly made them overvalued.
On Wednesday, the dollar, which had been weighed down by inflation fears, staged a comeback against the Japanese yen and the euro. Markets in London, Paris and Frankfurt were all down more than 0.3% on Thursday afternoon.
Commodity investors saw the slump and sold their stakes, further exaggerating the drops.
Wheat, corn, sugar, copper and platinum prices also dropped.