Spot palladium and platinum hit fresh multimonth highs on Tuesday, underpinned by healthy demand after the launch of new U.S.-based exchange-traded funds backed by the metals, and an improving outlook for the global economy.
Gold edged higher but gains were limited due to a lack of cues from the dollar in the currency market.
Following the launch of the palladium and platinum funds earlier this month, these metals have benefited from expectations that buying interest will remain intact for some time.
In addition, signs of steadying global economies and views that central banks might start draining ample funds from the banking system or raise interest rates later in the year are also prompting investors to buy the platinum group metals (PGM).
"The PGM price development is related to the global economy and views that the economy is already recovering," said Dick Poon, manager of precious metals at Heraeus in Hong Kong. "The
ETFs backed by PGMs are also supporting prices."
Investors sold inventories last year when demand was slack, but they started buying these metals from the second half of 2009, partly because they may need to fill up their stocks, Poon said.
"With the possibility of an interest rate rise later in the year, investors may be thinking it's better to buy PGMs now than later," he said.
Spot platinum rose above $1,626 per ounce to a fresh 17-month high on Tuesday, rising as high as $1,639.00, or up 1.6 percent, from late London trade on Monday.
Spot palladium rose as high as $460.25, the highest since early July 2008, or up 0.6 percent from late London trade on Monday.
Gold's rise on Tuesday was muted compared with the PGM price rally, as the dollar remained directionless while the euro dictated currency moves on Tuesday.
"There is only so much contagion gold can get from other metals," said Darren Heathcote, head of trading at Investec Australia in Sydney.
"Gold is still taking the lead from the U.S. dollar. We haven't seen much of a movement in gold because there is a lack of clear direction in the U.S. dollar," he said.
Spot gold [GCC1 1131.1 1.00 (+0.09%) ]inched up 0.5 percent to $1,138.15 per ounce
as of 0355 GMT compared with New York's notional close of $1,132.50.
New York energy and commodity markets are closed on Monday for Martin Luther King Jr. Day.
U.S. gold futures for February delivery were at $1,135.80 per ounce, up 0.7 percent from $1,130.50 on the COMEX division of the New York Mercantile Exchange on Friday.
The holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust , stood unchanged at 1,112.836 tonnes as of Jan 18.
The euro hit a four-month low against sterling on Tuesday as sterling drew strength after reports that U.S.-based Kraft Foods and Cadbury were arranging a deal to create the world's largest confectionery group. The euro was also pressured by persistent concerns over Greece's ballooning fiscal deficit.
Oil prices rose above $78 on Tuesday on expectations that Chinese economic indicators due this week will signal strong demand growth from the world's second-largest oil consumer.
China's industrial output probably jumped by 20 percent in the year to December after November's figure of 19.2 percent, a Reuters survey showed. That would be the fastest pace since February 2006.
