RTTNews - Gold posted a modest gain on Tuesday and recovered some of the losses from the prior session. A disappointing housing report reduced hopes the struggling sector is on the road to recovery and encouraged some traders to invest in the precious metal as a safety outlet.

June-dated gold settled at $926.70 per ounce, posting a gain of $5.00 for the session.

The dollar saw weakness against other majors. The dollar slid back towards a near-term low against the euro on a choppy trading day between the pair. The greenback extended a five-month low against the British pound and also fell against the yen, franc and loonie. Gold usually moves opposite the dollar because of the precious metal's hedge value.

The U.S. Commerce Department that showed housing starts dropped 12.8 percent in April to an annual rate of 458,000 units. The result for March was revised to a rate of 525,000 units. Analysts had expected starts to rise to 540,000 units.

Building permits were down 3.3 percent to an annual rate of 494,000 units.

Gold's hedge appeal was limited by some encouraging news from the financial sector. Three major banks - Goldman Sachs Group (GS), JPMorgan Chase (JPM) and Morgan Stanley (MS) - intend to apply to repay funds borrowed under the government's TARP program, fueling speculation that the worst in the financial crisis might be nearing an end.

On Monday, gold dropped $9.60, giving back some of its recent rise to a six-week high. The metal finished last week up $16.40 and gained $43.70 over the last two weeks on inflation concerns.

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