By Claudia Assis and Deborah Levine, MarketWatch
SAN FRANCISCO (MarketWatch) — Gold futures rose to a nearly three-week high on Tuesday, extending gains after China’s central bank raised interest rates to cool inflation pressures, while other metals followed suit.
Gold for April delivery (GCH11 1,365, +17.00, +1.26%) rose $19.20, or 1.4%, to $1,367.50 an ounce on the Comex division of the New York Mercantile Exchange.
A close around these levels would be gold’s highest since Jan. 19.
“Gold is moving higher after China validated inflation,” said George Gero, precious metals strategist at RBC Capital Markets.
In spite of gold’s choppy trading pattern, prices for precious metals have soared in recent months as a growing number of investors seek an alternative asset as a bulwark against inflation and the declining value of several currencies, including the dollar.
With Chinese financial markets slated to reopen later this week after Lunar New Year festivities, China’s central bank raised key interest rates for the third time since October in an effort to stave off inflation.
“As the Chinese Lunar New Year Festival draws to an end, China should return to the market tomorrow as a key driver of demand and give support to gold prices,” analysts at Commerzbank said in a note to clients Tuesday.
Meanwhile, copper staged a comeback, again flirting with a record high.
Copper for March delivery (HGH11 458.60, +1.10, +0.24%) advanced a penny, or 0.3%, to $4.59 a pound. It had earlier traded as low as $4.51 a pound.
Copper set a record last week propelled by optimism about the economy and the metal’s supply constraints. Read more on copper, gold.
Silver surpassed $30 an ounce, with the March contract (SIH11 3,027, +92.70, +3.16%) rising 77 cents, or 2.7%, to $30.13 an ounce. A close around these levels would be silver’s highest since Jan. 3.
Platinum and palladium also gained, as platinum traded at a 2 1/2-year high and palladium traded at its best in nearly 10 years. Platinum for April delivery (PLJ11 1,860, +15.80, +0.86%) added $15.80, or 0.9%, to $1,860 an ounce.
A settlement at this mark would be the metal’s best since July 18, 2008, when it closed at $1,858.30 an ounce.
And March palladium (PAH11 835.00, +15.95, +1.95%) rose $15.95, or 2%, to $835 an ounce. Such a settlement would be the highest since Feb. 23, 2001, when the metal closed at $855 an ounce.
“Silver, platinum and palladium are all in high demand at present because of their industrial character. With risk appetite generally high and sentiment optimistic, investors currently prefer commodities that are profiting strongly from the economic upswing,” the Commerzbank analysts said.
Claudia Assis is a San Francisco-based reporter for MarketWatch.
Deborah Levine is a MarketWatch reporter, based in New York
http://www.marketwatch.com/story/gold-gains-after-bank-of-china-rate-hike-2011-02-08
