Investing.com -- Gold surged more than $25 an ounce on Tuesday, as the dollar continued its prolonged slump and silver soared to a fresh 10-month high, each providing a considerable boost to the precious metal.
On the Comex division of the New York Mercantile Exchange, gold for June delivery traded in a broad range between $1,229.10 and $1,258.50 an ounce before settling at $1,255.30, up 20.40 or 1.65% on the day. With the sharp gains, gold enjoyed its strongest one-day session in more than a month. Gold is now up nearly 19% since the start of the year and is on pace for one of its strongest opening halves in more than a decade.
Gold likely gained support at $1,063.20, the low from January 4 and was met with resistance at $1,280.70, the high from Mar. 11.
A wave of soft U.S. housing data on Tuesday weighed on the dollar, pulling USD/CAD down to fresh nine-month lows in the wake of recovering oil prices. On Tuesday morning, the U.S. Census Bureau said building permits fell 7.7% in March to 1.086 million, extending declines of 2.2% over the previous month. The reading also fell sharply below consensus estimates of 1.200 million, as permits in the Northeast tumbled more than 21% on an annual basis.
At the same time, housing starts fell precipitously by 8.8% last month to 1.089 million, also far below analysts' forecasts of 1.167 million. Within the data, there were wholesale declines in starts across the U.S. with the exception of the Northeast region. The weak readings could dampen analyst sentiments heading into Wednesday's release of existing home sales for the month of March. Analysts expect sales to increase modestly to 5.268 million, following sharp declines of 7.1% in February.
As a result, the U.S. Dollar Index fell more than 0.50% to an intraday low of 93.89, slipping below 94 for the first time in a week. The index, which measures the strength of the greenback versus a basket of six other major currencies, is now percentage points away from hitting eight-month lows from last week. Dollar-denominated commodities such as gold become more expensive for foreign purchasers when the dollar appreciates.
Following Tuesday's massive rally, gold could remain in a holding pattern over the next week ahead of the Federal Open Market Committee's (FOMC) two-day meeting on April 26-27.Although the Federal Reserve is not expected to raise short-term interest rates at the meeting, the U.S. central bank could provide hints on whether it will approve a rate hike at a subsequent meeting in June. Gold has jumped approximately 3% since Fed chair Janet Yellen sent strong indications in late-March that the U.S. central bank will express extreme caution with the timing of future rate hikes in the near-term future.
Any rate hikes this year are viewed as bearish for gold, which struggles to compete with high-yield bearing assets in rising rate environments.
Silver for May delivery surged more than 4.5% to a fresh 10-month high at $17.105 an ounce, before falling back slightly to $16.925 at the close of trading. Silver can often follow the path of fluctuations in gold due to the storage of value demands.
Copper for May delivery jumped 0.060 or 2.75% to close at $2.224 an ounce.