Dow Jones News Service

NEW YORK (AP)—Commodities prices turned mostly lower Tuesday as the dollar clawed higher against other currencies, prompting investors to unload hard assets bought as a hedge against inflation.

Gold, silver, copper and crude oil prices all fell sharply, dragging down other commodities a day after a big rally.

The pullback comes as investors wait for U.S. officials and lawmakers to hash out a proposed $700 billion financial rescue plan. Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson on Tuesday urged Congress to quickly enact the plan, but lawmakers from both parties demanded changes to the White House-backed proposal that would remove billions of dollars in bad mortgages from the balance sheets of banks and brokers.

Worries that the plan would dramatically increase government borrowing sent the dollar sharply lower on Monday, pointing investors to the relative safety of safe-haven assets like oil and gold. But the greenback muscled higher against the euro Tuesday, diminishing the appeal of commodities.

Gold for December delivery fell $17.80 to settle at $891.20 an ounce on the New York Mercantile Exchange, after earlier dipping to $885. On Monday, prices jumped $44.37 to settle at $909 an ounce. Last Wednesday, the metal posted its biggest one-day gain ever, rising $70.

Other precious metals also fell. December silver fell 28 cents to settle at $13.17 an ounce on the Nymex, while December copper lost 10.3 cents to settle at $3.152 a pound.

In energy markets, crude oil fell for the first time in five days, pulling back from the previous session’s record-setting rally as the stronger dollar weakened demand for crude as inflation hedge.

Light, sweet crude for November delivery fell $2.76 to settle at $106.61 on the New York Mercantile Exchange, after earlier falling as low as $104.05. The contract jumped $6.62 to settle at $109.37 on Monday.

The October contract, which expired Monday, surged as much as $25.45 to $130 a barrel before falling back to settle at $120.92, up $16.37 — the biggest one-day gain ever.

Oil traders said the severe move was likely the result of an unusually severe “short squeeze,” a trading occurrence that happens when investors who bet that oil prices would fall rush to cover positions before the contract’s expiration. Still, oil did rise over four sessions on the same factors that drove it higher for the first half of this year: a lower dollar and worries about inflation.

At the Chicago Board of Trade, grain prices traded mostly higher Tuesday.

Wheat for December delivery rose 12.75 cents to settle at $7.505 a bushel, while December corn added 1.75 cents to settle at $5.6025 a bushel. November soybeans fell 18 cents to settle at $11.87 a bushel.