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.

In energy futures, crude oil jumped near $120 on the dollar's drop and concerns about supply constraints overseas. A Royal Dutch Shell PLC joint venture declared what's known as force majeure on April and May oil delivery contracts from a 400,000-barrel-a-day Nigerian oil field due to a pipeline attack last week. The move protects the company from litigation if it fails to deliver on contractual obligations to buyers.

Light, sweet crude for May delivery gained $1.69 to $119.17 a barrel on the Nymex, after earlier rising to a trading record of $119.90.

Other energy futures also rose. May gasoline futures added 3.38 cents to $3.0129 a gallon on the Nymex after earlier rising to a trading record of $3.023. May heating oil futures rose 1.86 cents to $3.33 a gallon after earlier rising to a trading record of $3.35.

In agriculture futures, corn prices jumped on expectation that more rainfall in the U.S. corn belt will further slow spring planting.

Corn for May delivery rose 13.75 cents to $5.94 a bushel on the Chicago Board of Trade, after earlier rising as high as $6.005.

Other agriculture futures also rose. Soybeans for May delivery surged 57 cents to $13.725 a bushel on the CBOT, while May wheat gained 2.75 cents to $8.485.