Energy, metals, agriculture futures fall

Commodities prices tumbled Monday as investors questioned the strength of the U.S. economy and what effect any weakness in this country might have on global demand for crude oil, copper and other raw materials.

Oil plummeted more than $3 a barrel on Monday, while industrial and precious metals prices slumped lower. Agriculture futures were mixed.

Without fresh economic news, commodities traders continued to digest last week's barrage of mostly weak data on personal income, construction spending, factory orders and other indicators. Data gauging the health of the overall economy in July has come in worse than economists expected and left commodities investors disquieted.

Investors are also awaiting a decision by the Federal Reserve on its benchmark interest rate, which has held firm at 5.25 percent since June 2006. Although the Fed is widely expected to leave the key rate untouched at its meeting on Tuesday, investors will scour the central bank's policy statement for clues into the health of the economy _ and the troubled credit markets in particular.

Lehman Brothers economist Ed Morse noted that many commodities markets have suffered abrupt, sharp declines over the past few days.

"The price slide has no basis in fundamentals and is rather coming from the financial community and nervousness of where the global economy is heading," he said.

Gold prices declined as the U.S. dollar fluctuated against major world currencies.

Currency traders will also closely monitor the Fed's rate decision, given that the direction and level of central bank interest rates buttress a currency's value. And gold prices often take cues from the dollar, rising when the greenback falls and vice versa as investors shift funds to higher yielding assets.

The gold market last week saw an outflux from long positions, or bets on rising prices, according to a Friday report by the Commodity Futures Trading Commission, which tracks speculative holdings in the commodities market. Long positions in gold decreased by 40.5 percent in the week ended July 31.

Gold for December delivery fell $1.10 to settle at $683.30 an ounce on the New York Mercantile Exchange, while September silver shed 12.5 cents to $13.033 an ounce.

Meanwhile, oil and gasoline prices each made steep declines on the Nymex. Light, sweet crude for September delivery lost $3.42, or 4.5 percent, to settle at $72.06 a barrel. Gasoline futures plunged 10.31 cents, or 5.1 percent, to settle at $1.9259 a gallon.

The weak economic news last week and profit-taking on Monday further undercut oil's rally to an all-time record high on Tuesday, when the front-month contract hit $78.77.

Overseas, industrial metals prices fell between about 2 percent to 4 percent on the London Metal Exchange, except for tin, which edged modestly higher. Lead suffered a more than 4 percent decline.

On the Nymex, September copper closed at $3.4735, down 0.55 cent a pound.

Agriculture futures mostly weakened Monday on the Chicago Board of Trade on a combination of changing supply perceptions and the wider economic concerns that have hurt the other commodities markets.

Traders shaved 11 cents off a bushel of November soybeans to $8.50 as rainy weather over the weekend alleviated concerns about the size of this season's crop, said David Hightower of Hightower Futures Research in Chicago. The soybean market saw prices surge roughly $1 between May and July to about $9.40 a bushel in a rally driven by concerns over the size of this year's crop. Although the acreage dedicated to soybeans is much smaller than it was a year ago, good weather has pointed to robust crop yields.

Wheat for September delivery rose 14 cents to close at $6.64 a bushel, while December corn ended unchanged at $3.43 a bushel.