The Dow Jones fell more than 500 points overnight, while the S&P 500 lost 6.1%.
Japan’s Nikkei also fell nearly 7%, hitting a five-year low.
On the local front, both indexes dropped below the 4000 point mark, with the S&P-ASX 200 shedding 181.7 points (4.37%) to 3974.4 points, while the All Ordinaries lost 180.8 points (4.39%) to 3939.3 points.
Leading the downward charge was Rio Tinto, which lost 14.6% or $11.45 to $66.95, while rival BHP Billiton lost just over 9% or $2.55 to $24.70.
Rio Tinto chief economist Vivek Tulpule told Dow Jones Newswires that commodity prices will rebound in 2009.
"Into 2009, we may start to see some pretty interesting supply pressures come back
into the system at around the time when demand could start to pick up again," he said.
Spot gold was trading at $US725.85 an ounce at 4:30pm EDT.
The major gold miners felt the full brunt of weakening prices with Lihir Gold dropping nearly 15% or 26.5c to $1.54 and Sino Gold Mining falling 11% or 38c to $3.02.
Newcrest Mining revealed today that its cash costs have nearly doubled during the September quarter, cushioned only by rising gold prices.
The miner shed 16.78% or $3.43 to $17.01.
Not even a maiden gold pour at its Leonora operations could save St Barbara’s share price from falling 8.7% or 2c to 21c.
ABN Amro head of precious metals Charles Dowsett said investors are moving away from gold and it could drop as low as $US650 an ounce.
"I expect gold to settle into a new, lower trading range,” he told Dow Jones Newswires.
However, the declines are yet to impact on demand for bullion at the Perth Mint, with the dealer reporting high sales.
OZ Minerals was once again the sector’s most heavily traded stock and its shares dropped 12% or 13.5c to 95.5c.
Indonesia-focused coal play Handini Resources made its debut on the local bourse today.
Only 1000 of the company’s stocks were traded today and it finished 8% or 4c down to 46c.
In good news, Haoma Mining jumped 50% or 2c to 6c after it confirmed positive gold and silver results from its Pilbara project.
Strategic Minerals gained 37% or 1.3c to 4.8c after announcing rock chip samples grading 91.4 grams per tonne gold were returned from the Woolgar gold project in Queensland.
Despite gains for some, the majority of miners were in the red today as commodity investors abandoned metals and gold and returned to cash.
“I think we are going into a global recession so I don’t really want to know about resources," an anonymous institutional trader told Dow Jones Newswires.
