1st LD Writethru: Gold up strongly on worse-than-expected U.S. data

Gold futures on the COMEX division of the New York Mercantile Exchange rose on Tuesday as worse-than-expected U.S. housing starts gave a boost to gold.

The most active gold contract for June delivery rose 19.3 U.S. dollars, or 1.56 percent, to settle at 1,254.30 dollars per ounce.

The precious metal was given support as a report released by the U.S. Department of Commerce on Tuesday showed housing starts falling by a much worse-than-expected 8.8 percent to a 1.089 million annualized rate during the month of March. Analysts note that the weakness is split between the two components, but also note strength in year-on-year rates for starts currently at 14.2 percent.

Gold was given further support as the U.S. Dollar Index, a measure of the dollar against a basket of major currencies, fell by 0.49 percent to 93.00 as of 17:10 GMT.

Gold and the dollar typically move in opposite directions, which means if the dollar goes up, gold futures will fall as gold, measured by the dollar, becomes more expensive for investors.

Traders will follow closely the data due out later this week for signs that the Fed may delay rate hikes even further. As of Tuesday, investors believe that the Fed may raise rates from 0.50 to 0.75 during the July FOMC meeting.

According to the CMEGroup's Fedwatch tool, the current implied probability of a hike from 0.50 to 0.75 is at 20 percent at the June 2016 meeting, and 33 percent at the July 2016 meeting.

Gold was prevented from falling further as the U.S. Dow Jones Industrial Average rose by 15 points, or 0.08 percent as of 17:10 GMT.

Analysts noted that when equities post losses, the precious metal usually goes up, as investors are looking for a safe haven, while the opposite is true when U.S. equities post gains.

Silver for May delivery rose 71.9 cents, or 4.42 percent, to close at 16.972 dollars per ounce. Platinum for July delivery added 37.9 dollars, or 3.88 percent, to close at 1,015.70 dollars per ounce. Enditem