NEW YORK/LONDON |
(Reuters) - Gold surged 1.5 percent to a three-week high on Tuesday, rallying with the stock market on optimism about the global economy after a bullish forecast by aluminum maker Alcoa.
The rise brought bullion above the 200-day moving average it had fallen below in mid-December, which also improved buying sentiment. The metal, which entered a bear market two weeks ago, is now up nearly 5 percent so far this year.
Silver also rallied nearly 4 percent, and platinum group metals also rose after Alcoa Inc's (AA.N) revenue beat expectations and the company gave a positive outlook for global demand for bellwether industrial metal aluminum, especially in the automotive markets.
"It's not so much investors are buying gold because the world is falling apart. It's just another place to for people make money," said Rick Bensignor, chief market strategist Merlin Securities.
Spot gold was up 1.6 percent at $1,636.46 an ounce by 12:13 p.m. EST (1713 GMT) and has climbed nearly 5 percent from the start of the year.
U.S. gold futures for February delivery were up by$29.30 an ounce at $1,637.40 in decent trading volume, consistent with a recent trend after thin holiday trade.
Spot silver rose 3.8 percent to $30.10 an ounce.
"Silver is well away from its 200-day (moving average) while
gold is at it. So, if metals are going to move, silver has room to go before it's going to hit resistance," said Bensignor.
A 10 percent drop in gold prices last month and a decline in money managers' speculative net long positions -- or bullish bets -- have left the metal with plenty of scope to rise, analysts said.
Commerzbank analyst Daniel Briesemann said that there was still a lot of catch-up potential for precious metals, since funds had slashed their net long position.
On the physical side of the market, buyers in India, the world's biggest gold consumer, took advantage of a drop in local prices to a one-week low to stock up ahead of the wedding season beginning later this month, dealers in Mumbai said.
PLATINUM PROSPERS
Platinum group metals were the biggest risers in percentage terms, with spot platinum up 2.4 percent to $1,458.74 an ounce and spot palladium up 3.9 percent at $636.85 an ounce. Platinum earlier hit a one-month high at $1,467.50.
The gold/platinum ratio -- a measure of the number of platinum ounces needed to buy an ounce of gold, which has typically held below 1 -- hovered near its highest in at least 25 years.
Platinum's cheap price compared with gold and the threat of supply constraints from South Africa have made it attractive to buyers, analysts said, although stocks are still relatively plentiful and the demand outlook in Europe is soft.
"Near term, the possibility of a short-covering rally cannot be ignored. But it doesn't really change the obstacles that platinum will likely encounter this year," UBS said in a note.
(Reporting By Frank Tang; Editing by David Gregorio)
