Gold rallied sharply on Tuesday after data showed US consumers were at their gloomiest in 2-1/2 years this month, which undermined the dollar and fed safe-haven demand for bullion. Earlier, a European Union spokesman said a meeting of finance ministers on Wednesday had been cancelled, while eurozone officials said leaders from the single currency bloc would be unlikely to provide many hard numbers to flesh out their response to the debt crisis.
EU leaders are to meet on Wednesday to discuss tentative plans for Greece's debt to be reduced, European banks to be recapitalised and the eurozone's EFSF rescue fund to be increased to provide partial insurance for sovereign bonds. Spot gold was last up 2 percent on the day at $1,685.70 an ounce, having risen by 4.0 percent over the last three trading days, its best three-day performance in two months. For this month, however, it has underperformed most major markets.
"The risks of the whole eurozone debt crisis are still skewed to the upside, and assuming there is some kind of result of some of the problems, markets should move higher and gold should go higher," said Standard Chartered analyst Dan Smith. As some of gold's traditional correlations to other assets such as equities or base metals have broken down, the price has become more unpredictable.
Holdings of metal in exchange-traded funds, often a measure of investor desire for physical bullion, staged their largest one-day rise since mid-September, following a net inflow of over 200,000 ounces, bringing total holdings to their highest in a month."The yellow metal is showing little independence at the moment and still moving in line with commodities and equity markets, albeit underperforming. We therefore do not expect any great price swings either in the wake of the EU summit on Wednesday," said Commerzbank in a note.
Silver rose by 0.3 percent to $31.75 an ounce, on course for its third straight daily rise. Options on US silver futures expire on COMEX on Wednesday. Most open interest centres on put options - which give the holder the right, but not the obligation to sell metal at a pre-determined price by that date - at $32.00 an ounce and on call options - which give the holder the right but not the obligation to buy metal - at $31.00.
Platinum was up by 0.9 percent at $1,551.99 an ounce, also having risen for three days in a row, marking its largest three-day gain since mid-August. Platinum has fallen by more than 12 percent this year as concern has grown about the impact of the eurozone debt crisis on demand for cars, particularly in Europe. Europe is the world's largest market for diesel-fuelled vehicles, which require a higher loading of platinum in their catalytic converters.
Platinum has had some fundamental support in the last week from import and export data from key trading centres. Customs data from Switzerland, a major clearing hub for both platinum and palladium, showed exports rose to their highest in three months in September, while customs data from China, a key consumer of metal for jewellery, showed imports nearly doubled year-on-year last month to hit their highest in six months. Palladium was last up 0.1 percent on the day at $636.47.