Gold Shrugs Off PPI

Updated from 1:11 p.m. EST

Gold's advance continued Tuesday, despite the release of tame inflation news. U.S. core producer prices might have been contained in March, but gold maintains its strength as crude still trades well above $70 amid tensions over Iran's nuclear ambitions.

Gold for June delivery finished on a gain of $4.50 at $623.30 an ounce, after hitting a new 25-year high of $623.80 intraday. Among other metals, silver advanced 42 cents to $13.78 an ounce, just off a fresh 22-year high of $13.80. Copper rose 7.60 cents to $2.9710 an ounce after earlier touching yet another all-time high of $2.97.

Gold briefly fell back in morning trade after the Labor Department said producer prices, excluding food and energy, rose a tame 0.1% last month.

Gold, which acts as a hedge against inflation, was also hit by bearish news from the U.S. housing market, which has been a key motor of the economy over the past several years. The Commerce Department said March housing starts dropped 7.8% from February to their lowest level in a year and below economists' forecasts.

But for gold, and other metals, a key story remains the price of crude oil, which has surged in recent weeks as the tension between Iran, the world's fourth-largest producer of crude, and Western countries continues to increase.

On Tuesday, the Institute for Science and International Security said Iran has expanded its underground nuclear sites, according to Bloomberg. Iran, which insists its nuclear program is solely for civilian use, is refusing to bow to the demands of the U.N. Security Council, which wants a suspension of the program by the end of April.

Less than 10 days after several U.S. media reports suggested the Bush Administration is considering military action in Iran, President Bush on Tuesday told reporters that although he'd prefer to solve the issue diplomatically "all options are on the table."