US gold futures moved into positive territory on Tuesday after of a softer-than-forecast US retail sales report and a Bundesbank announcement that it would not sell gold this year, traders said. An increase in crude oil prices helped underpin gold ahead of the US data, and further gains in crude added to the metal's subsequent rise.
"Oil was flirting with its session highs this morning. But metals were mixed. I think the retail sales impact helped the gold market. And the last flurry of activity was probably in line with the oil market trading up to its high of the day," said James Quinn, commodity commentator at AG Edwards.
Most-active gold for April delivery on the COMEX division of the New York Mercantile Exchange jumped $2.70 to $653.00 an ounce. It set a range of $648.20 and $653.80.
US crude oil futures were up sharply as traders took their cue from forecasts for greater gasoline demand and larger drawdowns in distillate stocks in the government's weekly inventory report on Wednesday. A drop in the dollar against the yen and Swiss franc for the second straight day also helped gold.
Dollar-denominated assets like gold often benefit from a tumbling US currency as overseas investors buy for the differential play. And bullion is used by investors as a hedge against oil-led inflation. But traders emphasised the light activity and said much of the action came from day traders. They said the latest push higher was due as much to technical as fundamental factors as bulls reached to extend the session peak.
"Trading has been very quiet. Whatever business has been done today it's mostly day traders pushing it around a little bit, trying to make a new high," said one gold dealer.
Spot gold rose to $650.10/1.10 an ounce, up from $647.00/7.75 an ounce in late Monday dealings. London's afternoon gold fix was $650.80. COMEX May silver dropped 5.0 cents to $13.0350 an ounce in a $12.88 and $13.13 range. Spot silver was quoted at $12.93/2.98 an ounce, off from $12.97/3.02 late Monday. Silver was fixed in London at $12.92.
NYMEX April platinum rose $7.70 to $1,221.50 an ounce. Spot platinum rose to $1,217.00/1,222.00. June palladium was down $3.50 at $352.50 an ounce. Spot palladium was fetching $346.00/51.00 late Tuesday.