Gold's record-breaking spree carried it to a record high on Tuesday as rising fears over euro zone sovereign debt sent investors scurrying for safety, supporting the dollar and spurring on copper, although oil fell.
Oil, which has rallied to a two-year high above $87 a barrel, dropped for its first session in seven as German September industrial output unexpectedly fell, feeding in to euro zone fears over a political impasse ahead of a key Irish budget vote.
The euro has dropped 3 percent against the dollar from a 9-½ month high set last week and against the yen it has slipped to a one-week low.
U.S. crude for December fell 17 cents to $86.89 a barrel by 0602 GMT (1:02 a.m. ET), after reaching $87.49 on Monday, its highest since October 2008. ICE Brent dipped 16 cents to $88.30.
Forecasts indicated U.S. crude stockpiles rose for the fifth time in six weeks.
\"It's just a general return to risk aversion that is driving the markets today,\" said Michelle Kwek, an analyst at Informa Global Markets in Singapore.
\"Oil has the dollar factor inside, and when the dollar rebounds, prices should come down. If the global economy is slowing, that should dictate prices lower.\"
The dollar .DXY rose 0.24 percent against a basket of currencies, bucking the prevailing trend since June.
Gold rose to a record high for the fourth straight session as inflation worries and euro zone sovereign debt woes exerted a pull on investors, pushing the precious metal to $1,414.60 an ounce, before it eased to $1,413.54.
Spot silver hit a new 30-year high just below $28, and palladium extended gains to a new 9-year peak of $714.25.
\"Anticipation of inflation, in addition to existing inflation in some countries, has fueled a sharp rally across the board in commodities,\" said Hou Xinqiang, an analyst at Jinrui Futures.
\"We don't see any chance that the United States, euro zone nations, or Japan would pull out of easy monetary policies any time soon, so inflation worries will continue to be a reason for speculative trades.\"
Gold prices have climbed nearly five percent since the U.S. Federal Reserve announced last Wednesday its plans to purchase $600 billion worth of government bonds, and silver 13 percent.
\"Liquidity is being thrown into the market place, the dollar is being debased as a way the U.S. government can get out of debt obligations, while Asian central banks keep buying dollars and keep their currencies cheap,\" said a Singapore-based trader.
\"Hard assets are just going to continue to benefit. There is a good argument for these metals go to up. There is a lot of momentum to buy.\"
Among industrial metals, copper prices in London and Shanghai rallied to their highest since 2008, as the dollar halted two days of gains.
Three-month copper on the London Metal Exchange rose 1.6 percent to $8,801 a tonne, its highest since hitting a record $8,940 in July 2008. Benchmark third-month Shanghai copper rose 2.4 percent to 67,980 yuan, its highest since March 2008. By 0608 GMT, LME copper traded at $8,776.
Earlier, prices dipped to $8,625 under pressure from a 0.5 percent surge in the dollar, which has rallied for the past two sessions on worries about euro zone debt.
\"Yes the market is worried about the euro zone, but they are more worried about the Fed, and about copper supply,\" a dealer in Hong Kong said. \"Despite the breakdown in the past few days, the short dollar-long commodity trade looks set to continue to be a money spinner.\"
Adding to the cautious tone, top officials at the U.S. Federal Reserve offered differing assessments of the central bank's $600 billion bond-buying program announced last week.
Among grains, Chicago Board of Trade December wheat rose 1 percent to $7.43-½ per bushel, up for a fourth straight session, and December corn gained 0.9 percent at $5.90-¾ a bushel near 26-month highs, as investors jockeyed ahead of a key USDA report on global demand and supply of agricultural commodities set for release at 1330 GMT.
Wheat futures have been supported by dry weather hurting crops in the United states, while the corn market has been aided by lower-than-expected U.S. yields and strong global demand.
\"U.S. wheat reports are not good, even though it is early in the season but the trade is getting concerned about the dryness,\" said Adam Davis, a senior commodity analyst at Merricks Capital, a Melbourne fund manager that invests in agriculture.