NEW YORK/LONDON (Reuters) - Gold rose 2 percent on Monday, posting its biggest daily gain in three months, as a combination of oil rally, dollar weakness and strong U.S. data boosted bullion’s investment appeal.
Platinum and palladium climbed to their highest in a week after ISM data showed that U.S. manufacturing expanded for the sixth straight month in January, and as metals holdings in U.S. exchange-traded funds reported strong inflow.
“The ISM manufacturing number was good. There is the suggestion of inflationary pressures coming through,” said Robin Bhar, analyst at Calyon.
Gold is used as a hedge against inflation, which decreases purchasing power in an investment portfolio.
Spot gold was last at $1,106.50 an ounce at 2:41 p.m. EST against $1,079.20 late in New York on Friday. Earlier in the session, it traded as high as $1,106.75, the strongest price since January 21.
Spot bullion’s more than 2 percent gain on Monday was its biggest since November 3, according to Reuters data.
U.S. gold futures for April delivery on the COMEX division of the NYMEX settled up $21.20, or 2 percent, at $1,105 an ounce.
Recovery in risk appetite has lifted oil and global equities prices, which all posted sharply higher prices, analysts said.
Gold prices remain vulnerable to further losses, however, after falling 1.6 percent in January, analysts said, with the dollar’s upward trend expected to resume.
“People have been seeking out gold as a currency hedge, and if that is no longer needed, that is going to cap some of the demand for gold,” said Citigroup analyst David Thurtell.
Holdings of the world’s largest gold-backed exchange-traded fund, the SPDR Gold Trust were unchanged on Friday, but down 21.7 tonnes or 1.9 percent in January.
Among other precious metals, platinum was at $1,546 an ounce versus Friday’s late New York quote at $1,500, and palladium was at $427.50 versus $413.
Both platinum and palladium hit their highest in a week.
“When you see strong industrial data, that is particularly positive for platinum and palladium due to their industrial characteristics,” said Bill O’Neill, partner at LOGIC Advisors.
O’Neill said there is no question that the ETF provides a new bullish influence for platinum prices.
Holdings of ETF Securities’ U.S.-based platinum exchange-traded fund (PPLT.P), launched last month, rose just over 30,000 ounces or 14 percent on Friday from its previous session, the company said.
Barclays Capital analyst Suki Cooper said during a conference call on Monday that she believes platinum group metals are set to outperform gold and silver this year.
“The launch of physically backed exchange-traded funds, coupled with expectations for auto sales to improve... is likely to bode well for PGMs, while expectations for the dollar to strengthen... are less positive for gold and silver,” she said.
Silver was at $16.64 an ounce against $16.16
(Additional reporting by Pratima Desai in London; Editing by Lisa Shumaker)
Reporting by Frank Tang