New York gold futures retraced initial losses to trade higher Tuesday on a lower dollar and after a government report showed US producer prices rose well above Wall Street's expectations, boosting bullion's appeal as a hedge against inflation.
However, possible sales of a part of more than 3,000 tonnes of gold held by the International Monetary Fund still weighed heavily on gold and kept prices from rising further.
"The IMF gold sales news added some sell-stops to the market," said George Gero, vice president of RBC Capital Markets Global Futures. The United States said on Monday it supported the sale of a limited portion of the IMF's gold stocks and was confident Congress would support the move.
The US Congress has in the past opposed gold sales by the IMF. Gero said that the news of possible gold sales had already taken a toll on gold even though the plan would still have to be passed by the Congress.
At 11:03 am EST (1603 GMT), the gold contract for April delivery at the Comex division of the New York Mercantile Exchange was up $5.30 to $945.80 an ounce, trading between $928.90 and $947.00.
The IMF is the world's third-largest gold holder, with 3,217.3 tonnes of reserves. Any sale of IMF gold might be done in accordance with a European Central Bank gold accord, which limits total gold sales to 500 tonnes a year, analysts said.
Spot gold was quoted at $942.10/943.00, higher than its Monday close of $937.80/938.60. London bullion dealers fixed the afternoon spot price at $937.75. The active Nymex platinum contract for April delivery was down $19.50 to $2,134.00 an ounce. Spot platinum fetched $2,130/2,140.
Palladium erased initial losses to turn higher on Tuesday. The Nymex March contract was up $6.30, or 1.2 percent, to $531.00 an ounce. Spot palladium fetched $523.00/528.00.
Comex March silver jumped 36.0 cents, or 2 percent, to $18.445 an ounce, trading between $17.930 and $18.495. Spot silver was at $18.41/18.46 compared with its last previous finish of $18.07/18.12. London silver was fixed at $18.12.