US gold futures jumped 2 percent to a one-week high on Tuesday, boosted by a host of bullish factors including inflation fears, a lower dollar and a rally in platinum group metals prices.
Platinum contracts surged as much as 5 percent on the back of supply problems in top producer South Africa, and sister-metal palladium also spiked as speculative demand surged due to worries of a huge deficit in the platinum market.
"I think that the gold is being led higher in part by the strength in platinum, which is carried over by the power situation in South Africa. In the short term, this is going to continue to support platinum," said James Steel, metals analyst with HSBC in New York.
At 10:20 am EST (1520 GMT), the active Nymex platinum contract for April delivery jumped $62.30 or 3.0 percent at $2,126.00 an ounce after hitting a record high of $2,174.00 in overnight trade. Spot platinum fetched $2,120/2,130. The April contract has now rocketed nearly than $700 or 45 percent after hitting a bottom of $1,506.10 on January 22.
The Nymex March contract surged $27.65 or 6.1 percent to $479.35 an ounce. It had initially hit a record high of $492.50. Spot palladium fetched $475.00/480.00. The gold contract for April delivery at the Comex division of the New York Mercantile Exchange was up $20.30 or 2.2 percent to $926.40 an ounce. It had peaked at $928.80 after bottoming at $903.20 earlier.
Other market-watchers also cited increasing demand in bullion as an alternative investment because of the ongoing issues with the global credit markets. Credit Suisse has written $2.85 billion off the value of its asset-backed investments and found mismarking and pricing errors on its books, it revealed on Tuesday.
Spot gold was quoted at $922.70/923.50 versus Friday's New York close of $903.00/903.80. London bullion dealers fixed the afternoon spot price at $924.00. Comex March silver was up 28.70 cents or 1.7 percent to $17.405 an ounce, trading between $16.965 and $17.490. Spot silver was at $17.36/17.41 compared with its last Friday quote of $17.11/17.16. London silver was fixed at $17.25.