Precious metals sprang back up on Tuesday as investors recommitted to buying commodities at more reasonable prices after last week's sobering declines on worries about economic growth and inflation.
At the Comex division of the New York Mercantile Exchange gold rose 2.4 percent, while silver, which has been extremely volatile in recent weeks, gained nearly 6 percent. They tumbled 8 percent and almost 13 percent, respectively, last week.
Gold matched a rise in crude oil back above $70 a barrel, being both a components of the broader commodity basket and an inflation hedge. An uncertain US dollar outlook also supported the yellow metal as a currency alternative.
Investors were also positioning ahead of Comex June options expiration on Thursday, traders said.
Next resistance in Comex gold was $675, while initial support lurked down at $650, traders said.
Comex gold rose to $732 an ounce 11 days ago, its highest since 1980, on investment buying and speculation linked to increased global political tensions, high energy prices and a weaker dollar.
Futures bottomed at $636.80 on Monday, the lowest price since late April, before bargain hunting steadied the market.
The World Gold Council said in a quarterly report on demand trends on Tuesday that "identifiable" global investment demand for gold either bullion or instruments backed by physical metal fell 6 percent in the first quarter, to 196.1 tonnes.
However, investment in gold exchange-traded funds and similar products backed by bullion and bought by retail and institutional entities jumped 23 percent to 108.7 tonnes, the report said. "We have evidence that investment was, in fact, up.
The afternoon bullion fix in London on Tuesday was $666.75. Bullion reached a lifetime high of $850 in January 1980. "I think investment demand is going to continue to rise," said Donald Doyle, chief executive of Blanchard & Co, a privately held coin and bullion dealer, predicting gold would surpass $800 this year and $1,000 in two years.
"The US investor has a tremendous amount of money to invest, they are looking for some degree of diversification out of the stock market, and the logical investment for them is into gold and other precious metals and commodities," he said.
Comex July silver surged 74 cents to $13.17 an ounce, rallying from a low of $12.2050 to $13.195. Futures hit a 25-year high of $15.20 an ounce on May 11. Spot silver advanced to $13.17/27 an ounce from $12.48/56 late on Monday. Silver fixed at $12.87 an ounce.
Nymex July platinum climbed $36.90 to $1,321.50 an ounce, but it held below last week's record of $1,347. Spot platinum rose to $1,315/1,325. June palladium went up $21.60, or 6.3 percent, to $363.35 an ounce. Spot closed at $359/365.