Gold rose more than 1 percent on Tuesday to $1,367.60 an ounce as traders covering short positions in the New York futures market pushed spot prices through key resistance at the metal's 100-day moving average. The metal unexpectedly made up the ground it lost earlier after a rise in Chinese benchmark interest rates pressured commodities, as the move was seen potentially curbing demand for raw materials in China's charging economy.
-- Platinum, palladium rally to multi-year highs
Spot gold was bid at $1,366.54 an ounce at 1641 GMT, against $1,350.46 late in New York on Monday. US gold futures for April delivery rose $19.30 an ounce to $1,367.50. "GCJ1 (The gold futures contract for April) has broken Friday's highs," said Afshin Nabavi, head of trading at Geneva's MKS Finance. He attributed the move to short covering: "Specs went short off the China headlines earlier. This is all futures-driven, as stops are driven through the post non-farm payrolls spike of $1,361, followed by the 100-day moving average around $1,362."
The gold price came under intense pressure last week after more signs emerged that global growth continues to improve and that the eurozone debt crisis has not worsened, which eroded some investor appetite for the metal. Its early rebound on Tuesday was short-lived after China's central bank raised interest rates by a quarter point to 6.06 percent, its second increase in just over a month as it stepped up its fight against stubbornly high inflation.
"A kneejerk reaction for commodities is obviously going to be lower on higher Chinese interest rates," said Simon Weeks, head of precious metals at the Bank of Nova Scotia. Gold buyers in China, the world's second-biggest bullion consumer, have been absent from the market this week for the Lunar New Year holidays, but will return on Wednesday. Also supporting sentiment towards gold, investment in exchange-traded funds showed signs of stabilisation, with holdings of metal in the SPDR Gold Trust up by 1 tonne in the past week to 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 level since July 2008 at $1,860.24 an ounce and was last up 1 percent at $1,856 an ounce. Palladium reached a fresh ten-year high at $836, and was last up 2.3 percent at $834.22 an ounce. Silver was last up 2.5 percent at $30.09. The price is up nearly 7 percent this month so far and is 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.
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