Gold, silver rise after dollar hits new low, oil spikes

Other commodities joined in the rally, with everything from copper to heating oil and agriculture futures trading higher.

The euro surged above $1.60 for the first time Tuesday after European officials warned of possible interest rate hikes to curb rising inflation. The 15-nation euro reached as high as $1.6018 before easing back to $1.5983 in afternoon trading, still above the $1.5916 it bought late Monday.

A weak dollar typically encourages investors to shift resources 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 rose $7.60 to settle at $925.20 an ounce on the New York Mercantile Exchange, after earlier rising as high as $928.50.

Despite the gain, some analysts expected gold to move higher, given past price swings following sharp drops in the dollar.

"The dollar had its brief moment in the limelight but it's really fairly disappointing to the gold crowd," said Jon Nadler, analyst with Kitco Bullion Dealers in Montreal. "Given the values of the dollar and oil, the fact that we're not at $980 or higher is not a good sign."

Other precious metals also rose. Silver for May delivery added 35 cents to $17.71 an ounce on the Nymex, while May copper gained 9.95 cents to $3.9655 a pound.

Nadler said gold's muted reaction could be due to the departure of several large funds from the commodities market as they rebalance their portfolios.

"The funds are looking at re-evaluating commodities it seems, with the exception of oil," he said.