US gold futures rallied from three-week lows on speculative and trade buying early Thursday, snapping back after a 1.8 percent drop previously, with added help from US economic data and firm crude oil.
As investor and trade bargain hunting lifted the precious metals complex, silver advanced 2 percent to regain the psychological $10-an-ounce level and platinum and palladium also climbed.
By 10:25 am EST, April delivery gold on the New York Mercantile Exchange's COMEX division was up $6.60 or 1.2 percent at $550.90 an ounce, trading between $540.70 and $551.30.
Dealers said gold rose, after Wednesday's fall to a three-week low below $540 an ounce, on consumer purchases at cheaper levels in the last day and on speculative short covering.
Players also piled back into the safe-haven metal following news of higher US trade deficit and as crude oil prices bounced above $60 a barrel, market sources said. "The gold market has attracted some new fund buying," Frank Aburto, a broker at Rosenthal-Collins Group, said. "I think that prices dropped enough so that people can take a second look and start buying again.
Precious metals and commodities in general got hit by fund selling Wednesday on fears about rising interest rates in the United States, Europe and Japan potentially helping shift investment interest to other asset classes.
Some analysts warned that gold, the metals and commodities broadly could be in a tricky spot within that environment.
Benchmark COMEX gold hit a 25-year peak at $579.50 on February 2 and then subsequently corrected down to as low as $537.80. Spot gold rose to $549.60/550.50 an ounce from Wednesday's late quote in New York at $542.60/3.60. Thursday's afternoon fix in London by bullion dealers hit $550.10. COMEX May silver surged 21.5 cents, or 2.2 percent, to $10.06 an ounce, in a range of $9.765 and $10.09.
Before Thursday, it had lost 5.5 percent in value since Friday, when it shot to a 22-year peak of $10.33 on anticipation of a US silver-backed investment vehicle potentially coming to market.
Spot silver rose to $10.02/10.05 an ounce from Wednesday's New York closing quote at $9.84/87. The fix in London was at $9.875.
NYMEX April platinum advanced $16 to $1,026 an ounce. Spot platinum was quoted at $1,019.50/1023.50. June palladium rose $6.55 to $288 an ounce. Spot palladium edged up to $284.50/288.50.
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