Fund closes as commodities fall

Gold like other commodities has fallen from record highs

Hedge fund firm Ospraie Management is closing its Ospraie Fund, which focuses on commodity investments, following a sharp fall in prices.

The Ospraie Fund has lost 38% of its value since the start of the year.

Analysts say it is likely that other troubled hedge funds will close, as the value of their investments slides.

Commodity prices, including precious metals and oil, have been falling as the dollar has climbed, reversing the trend earlier this year.

Gold is around $800 an ounce after falling to its lowest in nine months at around $773 in August, from a record $1,030.80 in March.

Crude oil is hovering at around $109 a barrel, having hit more than $147 a barrel in July.

As the world's largest economy slows there are expectations that demand for energy will slow.

And while the dollar was initially hit by concerns over the global credit markets, some analysts now argue that the US economy could recover faster than those of European countries, which would strengthen the US dollar.

Commodities are often viewed as a safe alternative to the US currency when it is weakening. When the dollar rises, commodity prices tend to fall.

Following the news of the closure, Peter Holst, managing director of Delta Global Advisors said: "This is just adding to the fire for commodity-related names".

The latest news about Ospraie will spell bad news for investment bank Lehman, which has a 20% stake in the hedge fund firm.