(Agencies)
Updated: 2008-04-17 07:58

NEW YORK - Gold prices jumped Wednesday after a plunge in US homebuilding helped push the dollar to a record low against the euro, boosting the metal's appeal as a hedge against inflation.

Traders deal crude oil futures, left, and crude oil options, right, at the New York Mercantile Exchange on Wednesday, April 16, 2008 in New York. Oil prices are surging to record highs as the weakening US dollar drives investments into commodities. [Agencies]

Other commodities traded mostly higher, with crude oil rising to a trading record above $115 and wheat prices also gaining.

US homebuilders began work on 947,000 homes in March, an 11 percent drop from February and the lowest amount since 1991, the Commerce Department said Wednesday. The data helped pushed the dollar to a record low against the euro, which traded at $1.5955, up from $1.5790 late Tuesday in New York.

"The driving factor in the gold market is almost record-low housing starts. ... It undermined the dollar and also triggered further safe-haven buying into gold," said James Steel, analyst with HSBC in New York.

A weak dollar encourages investors to shift funds 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 added $16.30 to settle at $948.30 an ounce on the New York Mercantile Exchange, after earlier rising as high as $952.70, its highest level in two weeks.

Gold has gained 10 percent this year and 31 percent in 2007, driven by a falling dollar, soaring crude prices and nervousness about the US economy. The metal has fallen from its record above $1,000 reached in March, but analysts say gold could resume its climb if the Federal Reserve continues its interest-rate cutting campaign as expected.

"Gold is in a bit of a range but by no means would I say it has hit a lull," Steel said.

Other precious metals also rose Wednesday. Silver for May delivery rose 47.5 cents to settle at $18.325 an ounce on the Nymex, while May copper added 9.9 cents to settle at $3.958 a pound.

In energy futures, crude rose above $115 for the first time on concerns about tight gas supplies heading into the summer. The Energy Department's Energy Information Administration said gas inventories fell by 5.5 million barrels last week, much more than forecast by analysts surveyed by Dow Jones Newswires.

Light, sweet crude for May delivery rose $1.14 to settle at $114.93 on the Nymex after earlier rising as high as $115.07.

Other energy futures also rose. May gasoline futures added 5.8 cents to settle at a record $2.939 a gallon on the Nymex after earlier rising to a trading record of $2.9427. May heating oil futures rose 0.91 cent to settle at $3.283 a gallon.

In agriculture futures, wheat prices shot up on supply concerns fed by Kazakhstan's move to ban exports in a bid to curb domestic food inflation.

Wheat for May delivery rose 28.75 cents to settle at $9.245 a bushel on the Chicago Board of Trade.

Other agriculture futures fell Wednesday. Soybeans for May delivery dropped 35.35 cents to settle at $13.4475 a bushel on the CBOT, while May corn futures lost 2.5 cents to settle at $6.035 a bushel.