Gold surges as dollar falls; oil nears $115, then retreats

Other commodities traded mixed, with crude oil falling from a record near $115 and wheat prices rising.

U.S. homebuilders began work on 947,000 homes in March an 11 percent drop from February and the lowest amount since 1991, the Commerce Department said Wednesday. The data helped pushed the dollar to a record low against the euro, which traded at $1.5955, up from $1.5790 late Tuesday in New York.

"The driving factor in the gold market is almost record-low housing starts. ... It undermined the dollar and also triggered further safe-haven buying into gold," said James Steel, analyst with HSBC in New York.

A weak dollar encourages investors to shift funds into hard assets like gold and silver, which are known for holding their value. A falling greenback also makes dollar-denominated commodities appear cheaper to overseas investors.

Gold for June delivery added $15.70 to $947.70 an ounce on the New York Mercantile Exchange, after earlier rising as high as $952.70 its highest level in two weeks.

Gold has gained 8.3 percent this year and 31 percent in 2007, driven by a falling dollar, soaring crude prices and nervousness about the U.S. economy. The metal has fallen from its record above $1,000 reached in March, but analysts say gold could resume its climb if the Federal Reserve continues its interest-rate cutting campaign as expected.

"Gold is in a bit of a range but by no means would I say it has hit a lull," Steel said.

Other precious metals also rose Wednesday. Silver for May delivery rose 48.5 cents to $18.335 an ounce on the Nymex, while May copper added 10.5 cents to $3.9640 a pound.

In energy futures, crude oil retreated from a record just below $115 after a government report showed demand for gasoline continues to fall.

Oil futures prices fell from a record near $115 a barrel Wednesday as investors absorbed a government report that showed gasoline demand continues to decline. The Energy Department's Energy Information Administration said gas demand has fallen an average of 1 percent each of the last four weeks compared to the same period last year.

Light, sweet crude for May delivery fell 44 cents to $114.23 a barrel on the Nymex after rising to a trading record of $114.95.

Other energy futures traded mixed. May gasoline futures added 4.35 cents to $2.9245 a gallon on the Nymex, while May heating oil futures fell 1.03 cents to $3.2636 a gallon.

In agriculture futures, wheat prices shot up on supply concerns fed by Kazakhstan's move to ban exports in a bid to curb domestic food inflation.

Wheat for May delivery rose 21.25 cents to $9.17 a bushel on the Chicago Board of Trade.

Other agriculture futures traded mixed Wednesday. Soybeans for May delivery dropped 20 cents to $13.60 a bushel on the CBOT, while May corn futures rose 0.75 cent to $6.0675 a bushel.