By Clara Denina
LONDON (Reuters) - Gold rose 2 percent, silver hit a 10-month high and platinum climbed to its highest in six months on Tuesday, as the dollar weakened after U.S. data came in below forecast.
U.S. housing starts fell more
than expected in March and permits for future home construction hit a
one-year low, suggesting some cooling in the housing market in line with
signs of a sharp slowdown in economic growth in the first quarter.
Gold
touched a one-week high of $1,256.80 an ounce and was up 1.7 percent at
$1,252.26 by 1433 GMT, while platinum rose 3.4 percent to its highest
since Oct. 23 at $1,013.71.
Silver climbed 5.2 percent to $17.07, its highest since June 2015, before stabilising with a 4.2 percent gain at $16.90.
"Precious
(metals) have performed amazingly well in the first quarter, silver is
probably playing some catch up with gold now ... the weaker dollar is
helping this afternoon," Societe Generale analyst Robin Bhar said.
"As the year goes on, a lot
depends on the Fed ... we may not have any hike before the end of the
year and that should provide support for gold."
The dollar extended losses after the U.S. data, falling 0.5 percent against a basket of major currencies.
Global equities climbed on Tuesday, but that did not dampen demand for gold, often seen as a hedge against risk.
Gold traders were also watching for comments from Federal Reserve officials to gauge the outlook for U.S. monetary policy.
"Gold
should probably hang on to its gains in the second quarter because the
dollar is likely to stay relatively subdued with the expectations of
U.S. interest rate hikes being pushed out to the second half of this
year," Mitsubishi Corp analyst Jonathan Butler said.
"That generally means that the yield environment for non-interest-bearing assets remains fairly favourable."
The Fed raised rates modestly
from near zero in December -- its first policy tightening in nearly a
decade. While futures markets imply no further increases until December,
Fed projections suggest there could be two more hikes by year-end.
New
York Fed President William Dudley said U.S. economic conditions were
"mostly favourable" but the Fed remained cautious on interest rates.
Boston
Fed President Eric Rosengren, however, said the Fed was set to increase
rates more rapidly than investors currently expected.
Top
gold consumer China launched a yuan-denominated gold benchmark on
Tuesday as the country took an ambitious step to exert more control over
the pricing of the metal and boost its influence in the global bullion
market.
Palladium gained 2.9 percent to $583.84 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore; Editing by David Goodman and David Evans)
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