Gold rose 1 percent on Tuesday to its highest in nearly three weeks on a combination of inflation fears, a weaker dollar and a breach by spot prices of key resistance at bullion's 100-day moving average. A rise in Chinese interest rates for the second time in just over six weeks benefited gold's status as an inflation hedge, even as the move initially prompted selling in the metal along with industrial commodities.
"Gold moved higher after China's rate hike ... and that brought more funds back to gold after the metal surpassed the $1,360 area," said George Gero, vice president at RBC Capital Markets. Spot gold rose 1.1 percent to $1,364.73 an ounce by 12:27 pm EST (1727 GMT). US gold futures for April delivery climbed $17.20 an ounce to $1,365.40.
Silver rallied 2.6 percent to $30.12 an ounce. Silver is up nearly 7 percent this month and within a few dollars of 31-year highs seen in early January. It is so high the Austrian Mint said it had cancelled production of five- and ten-euro silver coins indefinitely.
Also supporting sentiment towards gold, investment in exchange-traded funds showed signs of stabilisation, with holdings in the SPDR Gold Trust up 1 tonne in the past week at 1,228.864 tonnes. Among other precious metals, platinum and palladium rallied to multi-year highs in gold's wake. Both have seen inflows into some of the major ETFs in the past week, such as ETF Securities' US-listed products, indicating investor appetite. Spot platinum hit its highest since July 2008 at $1,860.24 an ounce, and was last up 0.9 percent at $1,855. Palladium rose to a 10-year high at $836 and was last up 2.1 percent at $832.47 an ounce.
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