[Copper] prices plunged more than 7% amid mounting fears that the global economic slowdown may turn into an outright recession.

Copper prices are closely followed as a key predictor of the economy since the base metal is used to manufacture goods ranging from cars to

In the past two months alone, prices have plummeted more than 20%, putting copper into bear market territory, which is pretty much a blinking red light for the global economy.

“We’re seeing a knee-jerk reaction, as if the world is coming to an end,” said Paul Simon, chief investment officer of Tactical Allocation Group.

On Thursday, prices sank 7.3% to $3.49 per pound. Other commodities also plunged. Crude oil prices tumbled 6.3% to about $80.51 a barrel, while silver dropped nearly 10% to $36.58 an ounce.

Global economy alarm bells ring

While sluggish global growth and a worsening European debt crisis have left investors in panic mode for weeks now, the gloom and doom intensified following the Federal Reserve’s dismal outlook and signs of slowing manufacturing activity in China and the eurozone.

Though the central bank has been warning of slower growth for months, its signal of “significant downside risks to the economic outlook” spooked investors.

“The Fed always tries to temper the language that could frighten the market, but it’s basically saying that the worst isn’t over for the economy,” said Keith Springer, president of Springer Financial Advisors.

Even gold, which is typically perceived as a safe haven to rush into during times of fear and uncertainty, fell almost 4% $1,741.70 an ounce Thursday, signaling just how fearful investors are about the potential for global deflation.