Although the global economy still faces uncertainties, better-than-expected manufacturing data from China supported sentiment and encouraged investors to return to the market after the year-end credit tightness forced many to the sidelines. Cash silver rose as much as 2.1 percent to $28.39 an ounce, before easing slightly to $28.20 by 0301 GMT. The metal, with extensive industrial applications, lost nearly 10 percent in 2011 as worries about the global economy weakened prospects of industrial metals. "Silver is one of the more appealling trades of the new year, after a lot of positions have been emptied out," said a Singapore-based trader. "Now the turn of the year has happened and we will probably see silver back on radar screens for some accounts, especially those with healthy tolerance for risk." Managed money cut net length on US silver futures and options to 6,200 lots in the week ended Dec. 27, its lowest in more than three years, according to data from the US Commodity Futures Trading Commission. Gold too rebounded from last month's losses, although analysts say it is far from re-testing all-time highs hit last September. Spot gold gained 0.7 percent to $1,576.24 an ounce, after posting a 10-percent rise in 2011. US gold rose nearly 1 percent to $1,582, before easing to $1,578.20. Technical analysis suggested spot gold could rise to $1,629 during the day, said Reuters market analyst Wang Tao. Iran's progress in its nuclear pursuit has gripped the oil market, and could potentially support safe haven demand in gold. But for now, gold's move hinges on the macroeconomic conditions and changes in risk appetite. "Gold is still trading on risk appetite, rather than acting as a safe haven," said Ong Yi Ling, an analyst at Phillip Futures in Singapore. China's official purchasing managers' index rose to 50.3 in December from 49 in the previous month, indicating a slight expansion in business activity, sending equities and industrial metals higher in Asia.