Gold rose more than 2% today as higher oil prices boosted its appeal as a hedge against inflation, but a rally in stock markets could also cap gains.
Not to be outdone, platimum rallied 5% to track gold, with gains in Tokyo futures offering extra incentives for speculators to buy the metal, which is mainly used in autocatalysts.
Gold was trading at $US847.70 an ounce, up $US16.90 from the New York notional close, having hit an intraday high of $US849.35 an ounce. It had dropped to $US821 an ounce on Monday, its weakest since October 3.
A dealer in Hong Kong said a lot of the buying was coming from Japan, where markets were closed due to a national holiday yesterday.
"I think $US920 is still the upside resistance for gold. It's hard to tell where the market is heading. It's going to be choppy and erratic again,'' he said.
Gold, which struck a record at $US1030.80 in March, traded around $US920 in late September.
US crude oil futures rose further on Tuesday, up along with Asian markets that rallied after a concerted effort by governments to shore up the banking sector gave hope the current financial crisis may ease.
Platinum was trading at $US1035.00 ounce, up $5US6.50 from New York's notional close. Platinum was well below a record high of $US2290 struck in March.
