Sept. 2 (Bloomberg) -- Commodities tumbled the most since March, led by energy prices, as Hurricane Gustav spared U.S. Gulf petroleum rigs the destruction caused by Katrina and Rita in 2005.

Natural gas tumbled the most in more than a year, crude oil fell to a five-month low and gasoline dropped 4.2 percent. The Standard & Poor's GSCI gauge and the Reuters/Jefferies CRB Index declined the most since March 19. The dollar jumped to the highest since October against six major currencies, eroding the appeal of raw materials priced in the U.S. currency.

``Gustav was much tamer than it might have been, and that led to a drop in oil, which triggered a commodity sell-off,'' said William O'Neill, a partner at Logic Advisors in Upper Saddle River, New Jersey. ``Across the board, it's bad news for commodities, and that's changing the money flow. Commodities have fallen out of fashion with investors.''

The energy-weighted S&P GSCI measure of 24 commodity futures dropped 31, or 4.4 percent, to 677.06. The gauge dropped 6.9 percent in August after plunging 12 percent in July. It surged 41 percent in the first half. The CRB index dropped 3.4 percent to 378.55.

``The second half will not be favorable for commodity prices,'' said investor Marc Faber, publisher of the Gloom, Boom and Doom Report. ``We peaked out. We've been in an extended bull market and a big correction can follow.''

The S&P GSCI has fallen 24 percent from a record on July 3. Lower raw-material prices may help ease inflation, which accelerated to more than a 17-year high in the U.S. in July and a 16-year high in the euro zone.

Global Economy

``We'll have to see whether it's a short-term peak or a long-term peak,'' Faber said today in Bangkok in an interview on Bloomberg Television. He forecast in June that commodities would start to fall.

Spiraling food and energy prices prompted the World Bank in June to forecast global growth would slow to 2.7 percent this year from 3.7 percent in 2007.

Any slowdown in consumption in the U.S. would hurt manufacturing countries that rely on exports to power their emerging economies, Faber said. The U.S. is the world's largest energy user and second-biggest consumer of industrial metals behind China.

The S&P GSCI touched 658.42, the lowest since April 2. Twenty of the 24 raw materials in the gauge declined. The index is still up 11 percent this year.

Natural-gas futures for October delivery dropped 68.2 cents, or 8.6 percent, to $7.258 per million British thermal units on the New York Mercantile Exchange, the biggest drop since Aug. 20, 2007.

Oil, Gasoline Tumble

Crude-oil futures for October fell $5.75, or 5 percent, to $109.71 a barrel. Earlier, the price touched $105.46, the lowest since April 4.

Gasoline futures for October tumbled 27.62 cents, or 9.2 percent, to $2.7337 a gallon. Earlier, the price touched $2.6082, the lowest since April 1.

Nymex floor trading was closed yesterday for the Labor Day holiday.

The U.S. Coast Guard said an aerial survey of oil and natural-gas platforms and rigs in the Gulf of Mexico yesterday found no structural damage and no oil spills. A flight this morning over the lower Mississippi River discovered some oil sheen, possibly from a partly sunken tugboat, Coast Guard Chief Petty Officer Adam Wine said.

Platforms Inspected

Workers from more than 70 percent of the platforms and rigs in the Gulf were evacuated as Gustav approached. All of the area's 1.3 million barrels a day of oil and 7.06 billion cubic feet of gas, 95 percent of the total, was shut. Royal Dutch Shell Plc, Total SA and ConocoPhillips said they were inspecting offshore Gulf platforms today.

Shell said today it plans to send a limited number of workers to its platforms in the Gulf of Mexico today.

``There have been specific things to energy and oil bringing prices lower, but they have also been caught up in the general-demand destruction story, as the U.S. virus spreads globally,'' said Michael Lewis, an analyst at Deutsche Bank in London.

Gold futures for December delivery fell $24.70, or 3 percent, to $810.50 an ounce on the Comex division of the Nymex, marking the biggest drop since Aug. 11.

The precious metal, which tends to weaken when the dollar strengthens, has tumbled 22 percent from a record $1,033.90 on March 17. A decline of more than 20 percent is the common definition of a bear market.

Gold, Oil Link

``In the short term, gold's direction will be determined by the moves in crude oil,'' John Reade, the head of metals strategy at UBS AG in London, said in a report. ``Barring currently unapparent damage to Gulf of Mexico production facilities or local refining operations, the downside appears vulnerable.''

Corn, wheat and soybeans declined. Among so-called soft commodities, cocoa plunged 7.6 percent, the most in eight weeks, and orange juice slumped 5.3 percent.

``The sharp drop in crude prices is the driving factor behind the weakness in grain markets,'' Toby Hassall, an analyst at Commodity Warrants Australia in Sydney, said in an e-mail. ``The fear premium that had been built into crude prices was hastily wiped away.''

To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net

Last Updated: September 2, 2008 16:28 EDT