U.S. gold hit new 25-year highs on Tuesday on aggressive buying by investment funds, while oil soared as a letter from Iran's president to U.S. President George W. Bush failed to defuse tensions over Iran's nuclear program.
Corn and soybeans rose as rains delayed planting in the Midwest, while orange juice hit 15-year highs on speculative buying ahead of the Atlantic hurricane season starting June 1.
Gold futures at the New York Mercantile Exchange's COMEX division pushed through the key $700 an ounce level on buying by investment funds, tension over Iran and the prospects of China buying gold to bolster its foreign reserves.
Bullion was also supported by a rally in platinum and copper prices. Traders said speculators were buying platinum, while supply concerns continued to feed gains in copper.
The overall metals market was boosted by the dollar's decline against the euro. Dollar-valued gold will cost less in Europe with the dollar's decline against the euro.
I think that platinum helped gold more than anything else, said a gold trader at a precious metals refiner in New York. But that China story certainly helps.
An official industry newspaper in China reported on Tuesday that some Chinese economists are urging Beijing to raise its gold reserves to 2,500 tonnes from the current 600 tonnes to boost gold's share in the country's foreign exchange reserves.
Investors also sought safe haven in gold amid steep gains in crude oil and tension over Iran's nuclear plans.
June gold rose $21.60 to $701.50 an ounce.
Oil futures soared after a letter to Bush from Iranian President Mahmoud Ahmadinejad failed to provide a diplomatic breakthrough in the nuclear standoff. It was the first such letter to the White House from Tehran since Washington broke off relations while Iran held U.S. hostages in 1980.
The market has absorbed the Iranian letter and is discounting the whole thing, said a NYMEX floor trader.
The United States dismissed the letter, saying it was a move by Tehran to divert attention from the nuclear issue.
Oil prices fell on Monday amid news of the letter, which sparked some hope for a resolution of the nuclear standoff.
Iran, OPEC's second biggest exporter, has been accused of seeking to develop nuclear weapons, but Tehran has said it only wants to produce energy for civilian use.
June crude oil
Corn and soybean futures at the Chicago Board of Trade rose amid rain delays to planting the spring crop in the Midwest.
The U.S. Agriculture Department late on Monday said 70 percent of the U.S. corn crop had been seeded as of Sunday. Traders had been expecting 70 to 80 percent. For soy, USDA said 18 percent had been seeded, while expectations were for 25-30.
Sporadic rains across the Midwest Corn Belt had slowed the pace of seeding last week, after farmers covered a lot of ground the previous week under mostly sunny skies.
May corn rose 1-1/2 cents to $2.28-1/2 a bushel while May soybeans rose 6-1/2 cents to $5.92-1/2.
Frozen orange juice futures recovered from early losses to hit a 15-year highs amid fears that storms during the coming hurricane season could damage Florida's citrus crop.
The industry is still recovering from storm damage last year, and from the spread of plant disease.
The trade sold it early and the specs grabbed some money as well. But the funds ran back in big-time and it shows no sign of backing off even though the market is massively overbought, a broker said.
July orange juice ended up 1.55 cents at 160.40 cents.