Gold surged more than 2 percent to a record above $1,270 an ounce on Tuesday, its biggest one-day gain in four months, as investors sought shelter from economic uncertainty and fled the US dollar. Gold also gained on concerns that more stimulus may be needed to get a shaky global economy firmly back on track, one of the factors that have underpinned the metal's 16 percent increase this year as major investors stock up on bullion.
"There is a lot of volatility and reaction to data ... people are looking for that defensive asset," Credit Suisse precious metals strategist Tom Kendall said. "Equity markets just remain very, very lacking in confidence, no one is prepared to put positions on and stick with them for any length of time," Kendall said.
Spot gold was at $1,272.40 an ounce by 12:08 pm EDT (1608 GMT), up from $1,245.25 the day before and having hit a record high of $1,274.75. US gold futures for December delivery were up $26.60, or 2.1 percent, at $1,273.70. COMEX gold floor trader Jonathan Jossen said buying related to bullish option-spread strategies had lifted gold futures. The gold price also tends to rally in September ahead of the Indian wedding season and Hindu religious festivals which are major gold-buying events, Jossen said.
Gold could rally above $1,300 an ounce this year, setting successive all-time highs, as uncertainty about economic recovery and a sovereign debt crisis stoke investment interest, metals consultancy GFMS Ltd said in a closely watched report.
Spot silver last fetched $20.41 an ounce, up from $20.02 the day before and on course for its third consecutive day of gains. In the platinum group metals, platinum leapt to its highest since early August, just below $1,590 an ounce, to be last quoted at $1,588.00 against $1,543.65 on Monday. Palladium hit its highest in four months, trading above $550 an ounce. Palladium was last at $550.50, up from $524.95 on Monday, set for its biggest daily rally since late May.
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