NEW YORK — Gold shot up near $1,000 an ounce Tuesday, then retreated as a surprise plunge in oil prices rattled commodities markets and suggested that the souring U.S. economy is slowing demand for energy and raw materials.

Crude prices fell more than $10 a barrel from their highest point in the day, beaten down as investors sold off stocks in response to growing worries about the health of the U.S. economy. Oil's drop weighed on most major commodities, with corn, soybeans, silver, copper and other energy futures all trading sharply lower.

Gold initially began the day higher for a fifth session as mounting concerns over the U.S. credit crisis pushed the dollar to a new low against the euro. A weak dollar encourages investors to buy hard assets like gold, considered a safe-haven investment during times of high inflation and economic uncertainty. A falling greenback also makes commodities cheaper for overseas investors.

Gold roared as high as $989.60 an ounce on the New York Mercantile Exchange, the highest trading level since the metal first topped the $1,000 threshold in March.

But the contract later plunged into negative territory — down 40 cents at $973.30 an ounce — as worries about the U.S. economy sent oil skidding. Analysts have said a prolonged U.S. downturn likely will suppress demand for fuel and raw materials.

"To have $9 or $10 fall in the pivot point of the commodities complex was something that gold could not ignore, and it didn't," said Jon Nadler, analyst with Kitco Bullion Dealers Montreal. "It was a roller-coaster supreme."

A host of bearish economic news also weighed on prices.

In his semiannual address to Congress, Federal Reserve Chairman Ben Bernanke said "numerous difficulties" are battering the economy and warned of heightened inflation risk from rocketing prices for food and energy.

Later in the day, President Bush said Americans were facing "a difficult time" amid record gas prices and falling home prices. He urged Congress to enact legislation to shore up mortgage giants Fannie Mae and Freddie Mac and to follow his lead by lifting a ban on offshore oil drilling to boost domestic production.

Other precious metals also fell Tuesday. Silver for September delivery dropped 30 cents to $18.95 an ounce on the Nymex, while Copper for September delivery lost 68.5 cents to $3.6835 a pound.

Crude's descent was preceded by a big move higher as the falling dollar prompted traders to buy oil as an inflation hedge.

A barrel of light, sweet crude for August delivery jumped as high as $146.73 before retreating more than $10 to a low of $135.92. Oil traded at $137.81 a barrel, down $7.37, in midday trading.

Other energy futures also fell. August heating oil futures fell 16.25 cents to $3.9024 a gallon on the Nymex, while August gasoline futures lost 18.9 cents to $3.3687 a gallon.

Meanwhile, agriculture futures slumped on crude's decline and ideal growing weather in the Midwest.

Corn for December delivery fell 14.25 cents to $6.68 a bushel on the Chicago Board of Trade, after earlier dropping to $6.615, the lowest since June 5.

Soybeans for November delivery fell 30 cents to $15.29 a bushel on the CBOT, while September wheat dropped 9.25 cents to $4.4825 a bushel.




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