Singapore - Oil and copper fell 3% while gold was down 1%, reversing strong overnight gains, as Democrat Barack Obama's win pushed up the dollar after it posted its biggest one-day slide in 13 years in the previous sesssion.
The dollar rose 0.7% against a basket of currencies to 85.187 after Obama captured the White House, defeating Republican John McCain to become the first black US president.
"The victory for the Obama will bring some certainty to the financial markets. And that's why currency analysts think that the dollar might rally for a slightly longer period. That could be negative for commodities in an indirect way," said Tobias Merath, head of commodities research at Credit Suisse.
A more than 10% surge in oil in the previous session, thanks to lower exports by Opec nations, and a 5% rally in gold, also gave investors reason to take profit.
"I am also not overly optimistic about commodities even after yesterday's sharp rise," Merath said. "I think economic conditions are bad and we have not yet seen the bottom. There is still scope for commodity prices to go down."
By 04:19 GMT, US light sweet crude for December delivery had fallen $2.08 or 2.9% to $68.45 a barrel. It settled up $6.62, or 10.4%, at $70.53 a barrel on Tuesday, the largest one-day gain since September 22, when it soared nearly 16%.
"The 10% jump last night was fairly extreme and what we're seeing this morning is nothing more than a partial correction from some profit taking," said David Moore, a commodities strategist at the Commonwealth Bank of Australia.
Election-euphoria rally
Moore said oil's movement would largely be influenced by the dollar, and though the result of the US election was not expected to have a direct impact on crude, prices would probably be swayed by equities markets.
Oil's surge on Tuesday came on signs Opec kingpin Saudi Arabia and other Opec members had made cuts in crude exports.
Gold, industrial metals
Gold was trading at $751.80 an ounce, down $10.15 from New York's notional close on Tuesday, when it hit an intraday high of $768 an ounce after the dollar dropped against the euro and triggered safe-haven buying.
"Given the significant rise in the price overnight, it bodes well for the rest of the day. We may well want to test the highs again in late afternoon, particularly around the opening of Europe and London," said Darren Heathcote of Investec Australia.
London Metal Exchange copper for delivery in three months fell 3.6% to $4,195. Before the results, the metal traded around 2% lower after rallying more than 6% overnight.
The Reuters-Jefferies CRB index, which tracks 19 commodity futures, rose more than 5% on Tuesday.
"We are in an election-euphoria rally. That could last until Thursday but will fade by next week as the grim reality of the world's economic situation re-emerges," Edward Meir, an analyst at MF Global, said.
Concurring, a dealer in Shanghai warned: "Trading companies are very cautious. Some of their customers have defaulted and the cost of credit remains very high. The mood is still pessimistic and the best news we can hope for is no more bad news."
Chicago Board of Trade corn for delivery in December fell 1.2% to $4.08 per bushel while November soybeans lost 1.4% to $9.36 per bushel.
Malaysian crude palm oil futures jumped 9% and Tokyo rubber futures surged 8% to a near one-month high.
- Reuters