* Gold hits highest in nearly three weeks on short covering
* Metal recovers from rate hike in China, which hits commods
* Strong Chinese buying expected post-Lunar New Year
* Platinum, palladium rally to multi-year highs
(Updates prices)
By Amanda Cooper and Jan Harvey
LONDON, Feb 8 (Reuters) - Gold rose more than 1 percent on
Tuesday to $1,367.60 an ounce as traders covering short
positions in the New York futures market pushed spot prices
through key resistance at the metal's 100-day moving average.
The metal unexpectedly made up the ground it lost earlier
after a rise in Chinese benchmark interest rates pressured
commodities, as the move was seen potentially curbing demand for
raw materials in China's charging economy.
Spot gold <XAU=> was bid at $1,366.54 an ounce at 1641 GMT,
against $1,350.46 late in New York on Monday. U.S. gold futures
for April delivery <GCJ1> rose $19.30 an ounce to $1,367.50.
"GCJ1 (The gold futures contract for April) has broken
Friday's highs," said Afshin Nabavi, head of trading at Geneva's
MKS Finance.
He attributed the move to short covering: "Specs went short
off the China headlines earlier. This is all futures-driven, as
stops are driven through the post non-farm payrolls spike of
$1,361, followed by the 100-day moving average around $1,362."
The gold price came under intense pressure last week after
more signs emerged that global growth continues to improve and
that the euro zone debt crisis has not worsened, which eroded
some investor appetite for the metal.
Its early rebound on Tuesday was short-lived after China's
central bank raised interest rates by a quarter point to 6.06
percent, its second increase in just over a month as it stepped
up its fight against stubbornly high inflation. []
"A kneejerk reaction for commodities is obviously going to
be lower on higher Chinese interest rates," said Simon Weeks,
head of precious metals at the Bank of Nova Scotia.
"(But) demand for gold is still strong," he added. "In the
short term people are expecting China to come back from their
New Year holidays (with) pent-up demand for gold."
Gold buyers in China, the world's second-biggest bullion
consumer, have been absent from the market this week for the
Lunar New Year holidays, but will return on Wednesday.
"The premium on the Shanghai Gold Exchange was still $8 over
the global price when they went away, whereas last year when
they went on holiday it was flat if not at a small discount to
the international markets, so there is still demand out there,"
Weeks said.
COMMODITIES RECOVER
Oil and copper prices recovered losses made after China's
interest rate increase. The dollar index slipped 0.4 percent,
meanwhile, adding further upward pressure to gold. [] []
U.S. stocks were little changed, with investors focused on
corporate earnings and the impact an interest rate hike in China
will have on global economic demand. []
Also supporting sentiment towards gold, investment in
exchange-traded funds showed signs of stabilisation, with
holdings of metal in the SPDR Gold Trust <GLD> up by 1 tonne in
the past week to 1,228.864 tonnes. []
In January the fund registered its largest monthly outflow
of metal since April 2008 as investors favoured equities and
industrial commodities over perceived safe havens.
"The SPDR holdings have been nearly unchanged, and
profit-taking from investors has perhaps stopped for the
moment," said LBBW commodities strategist Thorsten Proettel.
Among other precious metals, platinum and palladium rallied
to multi-year highs in gold's wake. Both have seen inflows into
some of the major ETFs in the past week, such as ETF Securities'
U.S.-listed products, indicating investor appetite.
Spot platinum <XPT=> hit its highest level since July 2008
at $1,860.24 an ounce and was last up 1 percent at $1,856 an
ounce. Palladium <XPD=> reached a fresh ten-year high at $836,
and was last up 2.3 percent at $834.22 an ounce.
Silver <XAG=> was last up 2.5 percent at $30.09.
The price is up nearly 7 percent this month so far and is
within a few dollars of 31-year highs seen in early January. It
is so high the Austrian Mint said it had cancelled production of
five- and ten-euro silver coins indefinitely. []
(Editing by Anthony Barker)
