Gold prices climbed more than 1% to their highest levels in a week on Tuesday and other precious metals also rallied on the back of a sliding dollar, as markets remained focused on the Federal Reserve's interest rate strategy.

Spot gold rose 1.6% to $1,815.10 per ounce by 1:57 p.m. ET (1857 GMT), while U.S. gold futures settled up 1.5% at $1,825.4.

The yen surged to a four-month peak against the dollar after the Bank of Japan stunned markets by deciding to review its yield-curve control policy.

Weaker housing data lead to flight-to-safety buying in the precious metals, which along with the decision from the Bank of Japan, was the "perfect storm" this morning, said Bob Haberkorn, senior market strategist at RJO Futures.