Nov. 20, 2007 (Thomson Financial delivered by Newstex) --

NEW YORK (AP) - Gold prices rebounded sharply Tuesday as investors sought to shield themselves from rising energy prices and the U.S. dollar's decline to an all-time low against the euro.

The weak greenback bolstered other commodities, as well. Investors shifted into futures for energy, agricultural products and other metals prices amid a belief that raw materials will hold their value relative to all currencies. As the dollar slides, commodities also become more attractive to foreign buyers, whose currencies can essentially buy more in the U.S. market for less.

The dollar's sharp drop Tuesday was rooted in poor news from the housing sector. The Commerce Department posted an unexpectedly low level of building permit applications, an indicator of future housing construction. Meanwhile, Freddie Mac (NYSE:FRE) , the nation's second-largest buyer and guarantor of home loans, posted its most severe quarterly loss ever. The housing sector has been one of the economy's sorest spots, and worries that the pain could spread to other industries and hurt economic growth has pressured the dollar lower.

Gold rallied following several losing sessions -- a downward correction that many analysts had expected after the metal's long run higher. But as the dollar bottomed and oil prices jumped on Tuesday, gold appeared to regain its status as a safe-haven investment.

The December gold contract gained $16.60 to $794.60 an ounce in midday trading on the New York Mercantile Exchange. Prices had plummeted to $778 on Monday after trading as high as $848 an ounce on Nov. 7, the highest level since 1980.

December silver added 46.5 cents to $14.625 an ounce, while January platinum rose $5.90 to $1,463 an ounce on the Nymex.

The Commerce Department said Tuesday that housing construction rebounded in October. But most of the strength came from the volatile apartment sector and, meanwhile, applications for building permits -- an indicator of future activity -- fell for the fifth straight month in October. Permit applications are down 24.5 percent from a year ago.

Freddie Mac on Tuesday reported a $2 billion loss in the third quarter and said it must raise capital to meet regulatory requirements. The mortgage lender, like many financial companies, has suffered from rising defaults on home loans.

Later Tuesday, the Federal Reserve will release the minutes of its October meeting. Investors will be looking for insight into the central bank's decision to cut interest rates for a second time in as many months and any hint of the Fed's future moves on rates.

The dollar declined against most major currencies, with the steepest move lower versus the euro. The 13-nation euro bought a record $1.4814 at midday, up from $1.4667 late Monday.

Oil prices rose on dollar weakness and news of an outage at a refinery in Canada. Royal Dutch Shell PLC (NYSE:RDS A) temporarily shut down its Alberta oil sands (TSXV:AOS) plant due to a fire.

Light, sweet crude for January delivery jumped $1.88 to $96.52 a barrel on the Nymex.

December gasoline futures rose 3.84 cents to $2.42 a gallon, while December heating oil futures rose 4.78 cents to $2.652 a gallon.

Industrial metals prices were mixed on the London Metal Exchange. Nickel, lead and zinc prices edged higher, while copper and tin prices slipped. In New York, copper followed the other, Nymex-traded metals higher, rising 5.05 cents to $3.034 a pound.

Elsewhere, agriculture futures rose on the Chicago Board of Trade. December corn futures rose 6 cents to $3.835 a bushel, while January soybean futures gained 9.25 cents to $10.7975 a bushel. Wheat for December delivery rose 0.75 cents to $7.57 a bushel.


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