Gold rose on Thursday, recovering in part from the previous session's slide, as better performance in equity markets and underlying uncertainties surrounding the US fiscal crisis increased bullion's investment appeal.
Silver and platinum group metals also climbed on hopes of better demand related to a US budget deal. Palladium rose 1.5 per cent to its highest in more than two months as ongoing supply worries and technical buying extended the auto catalyst metal's rise to a third consecutive day.
Bullion tracked the S&P equities index and crude oil higher, but trading was choppy after House of Representatives Speaker John Boehner said there was no progress in "fiscal cliff" talks.
"Gold is getting a boost because of the safety element due to the fiscal cliff. With gold's sell-off yesterday, it reached an attractive level for people to move a small amount of capital into gold," said Phillip Streible, senior commodities broker at futures brokerage R.J. O'Brien.
Spot gold was up 0.5 per cent at $1727.51 an ounce after it traded as low as $1705.64 an ounce on Wednesday.
US Comex futures for December delivery settled up $10.70 at $1727.20 an ounce, with volume about 30 per cent above its 250-day average.
The implications of the $600 billion tax hikes and spending cuts known as the fiscal cliff are unclear for gold, analysts said.
Protracted talks, which could heighten risk aversion, may lift gold prices if they trigger safety buying amid economic uncertainty. In the short-term, however, hopes for a quick resolution are benefiting gold as it keeps pace with stocks.
On chart, gold is not trading below its key resistance of 50-day moving average at $1738 an ounce, while recent lows between $1703 and $1705 should offer support, analysts said. Despite Wednesday's pullback, holdings of the SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, hit a record high for a second consecutive day, underlying buoyant investment interest.
Silver, palladium higher
Quarterly results from a major US jewellery retailer suggests demand for silver jewellery could come under pressure due to a slow global economic recovery.
Jewellery retailer Tiffany & Co said that in its third quarter it sold fewer silver jewellery items costing less than $500, its most profitable merchandise in the American market. The company also blamed high costs of precious metals and diamonds for weaker gross margins. Silver rose 1.6 per cent to $34.27 an ounce.
Among platinum group metals, platinum was up 0.4 per cent to $1609.49, while palladium climbed to its highest since mid September at $689 an ounce. It was last traded up 1.7 per cent at $684.22 an ounce.
Traders said that strong technical buying lifted palladium, which is used mostly in making automotive catalytic converters that clean exhaust fumes in cars. Supply worries due to mine violence in South Africa and dwindling Russian state stocks also boosted the metal, analysts said.