* Gold hits highest in nearly 3 weeks on technical buying
* Metal recovers from China rate hike
* Platinum, palladium rally to multi-year highs
* Egypt, Middle East in focus
(Recasts, adds comments, new byline and dateline, previously
LONDON)
By Frank Tang
NEW YORK, Feb 8 (Reuters) - Gold rose 1 percent on Tuesday
to its highest in nearly three weeks on a combination of
inflation fears, a weaker dollar and a breach by spot prices of
key resistance at bullion's 100-day moving average.
A rise in Chinese interest rates for the second time in
just over six weeks benefited gold's status as an inflation
hedge, even as the move initially prompted selling in the metal
along with industrial commodities. []
Gold was trying to restore upward momentum after gaining
more than 4 percent in the past 10 days, withstanding fading
safe-haven demand as U.S. equities rallied to mid-2008 highs
and U.S. Treasury bond yields rose for a seventh straight
session on inflation worries. [] []
"Gold moved higher after China's rate hike ... and that
brought more funds back to gold after the metal surpassed the
$1,360 area," said George Gero, vice president at RBC Capital
Markets.
Spot gold <XAU=> rose 1.1 percent to $1,364.73 an ounce by
12:27 p.m. EST (1727 GMT). U.S. gold futures for April delivery
<GCJ1> climbed $17.20 an ounce to $1,365.40.
Silver <XAG=> rallied 2.6 percent to $30.12 an ounce.
Silver is up nearly 7 percent this month and within a few
dollars of 31-year highs seen in early January. It is so high
the Austrian Mint said it had cancelled production of five- and
ten-euro silver coins indefinitely. []
Afshin Nabavi, head of trading at Geneva's MKS Finance,
cited short-covering and technical buying, which lifted April
gold futures above last Friday's highs.
"Specs went short off the China headlines earlier. This is
all futures-driven, as stops are driven through the post
non-farm payrolls spike of $1,361, followed by the 100-day
moving average around $1,362," Nabavi said.
Simon Weeks, head of precious metals at the Bank of Nova
Scotia, said consumer demand from China, the world's
second-biggest bullion consumer, could rise after the end of
the Lunar New Year holidays this week.
COMMODITIES RECOVER
Oil and copper prices recovered losses made after China's
rate hike. The dollar fell sharply against the euro, adding
further upward pressure to gold. [] []
Also supporting sentiment towards gold, investment in
exchange-traded funds showed signs of stabilization, with
holdings in the SPDR Gold Trust <GLD> up 1 tonne in the past
week at 1,228.864 tonnes. []
In January, the fund registered its largest monthly outflow
of metal since April 2008 as investors favored equities and
industrial commodities over perceived safe havens.
"The SPDR holdings have been nearly unchanged, and
profit-taking from investors has perhaps stopped for the
moment," said LBBW commodities strategist Thorsten Proettel.
Among other precious metals, platinum and palladium rallied
to multi-year highs in gold's wake. Both have seen inflows into
some of the major ETFs in the past week, such as ETF
Securities' U.S.-listed products, indicating investor
appetite.
Spot platinum <XPT=> hit its highest since July 2008 at
$1,860.24 an ounce, and was last up 0.9 percent at $1,855.
Palladium <XPD=> rose to a 10-year high at $836 and was last up
2.1 percent at $832.47 an ounce.
Prices at 12:42 p.m. EST (1742 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCJ1> 1367.20 19.00 1.4% -3.8%
US silver <SIH1> 30.155 0.812 2.8% -2.5%
US platinum <PLJ1> 1861.00 16.80 0.9% 4.7%
US palladium <PAH1> 836.00 16.95 2.1% 4.1%
Gold <XAU=> 1366.45 15.99 1.2% -3.7%
Silver <XAG=> 30.16 0.79 2.7% -2.3%
Platinum <XPT=> 1854.99 16.99 0.9% 4.9%
Palladium <XPD=> 834.00 18.53 2.3% 4.3%
Gold Fix <XAUFIX=> 1363.50 9.50 0.7% -3.3%
Silver Fix <XAGFIX=> 29.42 21.00 0.7% -4.0%
Platinum Fix <XPTFIX=> 1848.00 5.00 0.3% 6.8%
Palladium Fix <XPDFIX=> 823.00 5.00 0.6% 4.0%
(Additional reporting by Amanda Cooper and Jan Harvey in
London; Editing by Dale Hudson)
