NEW YORK — Commodities prices fell sharply Wednesday over concerns that China might be moving to tighten oversight of its banks.

A top Chinese banking regulator said the country will more closely monitor its banks in an effort to prevent speculative bubbles from forming. Any restrictions on lending in China could cool the country's rapid growth and disrupt a broader global economic rebound.

That in turn could dampen demand for commodities. A drop in demand for basic materials in China would particularly hurt commodities prices since China has had one of the strongest economies during the global downturn.

Investors flocked to the safety of U.S. government-backed bonds and the dollar because of the concerns in China. A stronger dollar further hurts demand for commodities because it makes them more expensive for foreign buyers.

"It's a classic risk aversion play," said Adam Klopfenstein, a senior market strategist at Lind-Waldock. "On those types of days, there's no place to hide."

Even commodities that had been surging in recent days were pulled down by the news.

The ICE Futures US dollar index, which measures the dollar against six other currencies, rose 1 percent.

Metals were hit especially hard. Gold for February delivery fell $27.40, or 2.4 percent, to settle at $1,112.60 an ounce. Silver for March delivery dropped 92 cents, or 4.9 percent, to $17.88 an ounce, while platinum for April delivery tumbled $21.80 to $1,617.60 an ounce.

Klopfenstein said Wednesday's retreat didn't necessarily signal a long-term shift in generally positive sentiment about commodities, and he said a one or two-day pullback was likely before prices move higher again. Commodities had been rallying early this year on hopes that the global economy would turn around.

Energy prices fell. Crude for February delivery gave up $1.40 to settle at $77.62 a barrel on the last day of trading for the contract on the New York Mercantile Exchange. Most of the trading already moved to the March contract, which fell $1.58 to settle at $77.74 a barrel.

In other Nymex trading, February heating oil fell 2.43 cents to settle at $2.0211 a gallon, while February gasoline dropped 1.26 cents to settle at $2.0465 a gallon. February Natural gas futures lost 6.1 cents to settle at $5.496 per 1,000 cubic feet.

Grain prices also fell. Wheat for March delivery dropped 3 cents to settle at $4.975 a bushel. Soybeans declined 13.5 cents to $9.50 a bushel, while corn declined 1.25 cents to $3.68 a bushel. (AP)