Gold falls as investors end year

New York - Wall Street's fears about fighting in the Middle East eased on Tuesday, sending oil and gold prices lower as commodities investors looked to close the books for the year.

Investors sold gold after it had advanced on Monday amid fighting between Israel and Hamas leaders in Gaza. Contracts for February delivery of the metal fell $1.70 to settle at $873.60 an ounce on the New York Mercantile Exchange.

Gold remains above levels of mid-November when it was hit by heavy selling by hedge funds and other large investors trying to raise cash.

The price of oil also declined on Tuesday after Israeli officials said the nation was considering a 48-hour halt to its four-day air campaign on Hamas to see whether Palestinian militants would stop their rocket attacks on southern Israel.

"On the energy side the geopolitical tensions seemed to be losing their sting a bit," said Edward Meir, senior commodities analyst at MF Global in New York.

Light, sweet crude for February delivery fell 99c to settle at $39.03 a barrel on the New York Mercantile Exchange.

Meir noted that overall trading volume was light as the year ends.

"I don't think anyone's doing anything. Volumes have dried up and they're going to write the year off," he said.

In other Nymex trading, gasoline futures rose about a penny to settle at 87.45c a gallon, while heating oil gained less than a cent to settle at $1.2853 a gallon.

The dollar was lower against the euro and rose against the British pound.

Grain prices have been climbing the past few weeks on the Chicago Board of Trade and rose again on Tuesday after slipping on Monday.

March copper futures added 0.0175c to close at $1.3290 a pound, while March silver rose 16c to close at $10.97 an ounce.

- AP