Spot gold inched higher on Tuesday after China's weaker-than-expected inflation data eased fears of more aggressive tightening moves, while persistent concerns about rising prices are expected to buoy gold in the longer term.
Trading in the physical market remained thin, as players stayed on the sidelines waiting for a clear direction as prices have been trapped in a narrow range in the past few sessions.
Chinese inflation was lower than expected at 4.9 percent in the year to January, but price pressures continued to build and will force the central bank to stick to its course of monetary tightening. The number was in line with market talk in the past few days of a weaker number.
"The number, in line with market expectations, may help reduce fears of further tightening and underpin gold prices to a certain extent," said Hou Xinqiang, an analyst at Jinrui Futures in China.
Spot gold [XAU=X Unavailable ()] gained 0.2 percent at $1,364.75 an ounce. Prices have ranged between $1,348 and $1,368 in the past five sessions. U.S. gold futures [GCJ1 1365.70 0.60 (+0.04%)] were little changed at $1,365.5.
Spot gold is technically neutral, due for a sharp move soon, as the current sideways mode will end either on Tuesday or Wednesday, said Reuters market analyst Wang Tao.
Holdings in the SPDR Gold Trust [GLD 132.95 0.6275 (+0.47%)], the world's largest gold-backed exchange-traded fund, remained unchanged at 1,225.526 metric tones.
Physical buying had yet to pick up after the Lunar New Year holiday, dealers said.
"Over the long (Lunar New Year) holiday, inventories have built up from the shipments that arrived," said a Hong Kong-based dealer.
He added that gold premium in Hong Kong had narrowed to below $2 an ounce over London prices, from over $3 before the holiday when supply was tight and buying interest running high.
"People have no intention to buy now, but I think next week activities will pick up."
Investors continued to watch the development in the widespread unrest in Middle East nations. Political turmoil may drive investors to seek safe-haven assets such as gold.
Strength in industrial metals spilled to platinum group metals, which have extensive industrial applications.
Three-month copper on the London Metal Exchange rose to a record high at $10,175.50.
Spot platinum [PLCV1 1840.90 13.30 (+0.73%)] gained more than half a percent at $1,836 an ounce. Spot palladium [PACV1 836.05 3.25 (+0.39%)] edged up 0.2 percent at $832.97.
