• From: Dow Jones Newswires
• January 12, 2010 7:57AM

Lightly traded but nearby January gold rose $US12.50 to $US1150.70 an ounce on the Comex division of the New York Mercantile Exchange, while most-active February climbed $US12.50 to $US1151.40.

"There are two major reasons and they are related, with one causing the other," said Craig Ross, vice president of ApexFutures.com.

Gold hit its peak overnight after a report showed that Chinese exports climbed nearly 18 per cent, while imports were up 56 per cent.

The imports showed that the country remains on a "commodities shopping spree", helping improve risk appetite, said Jon Nadler, senior analyst with Kitco Metals. As a result, gold shot up at "warp speed" in the overnight session, he said.

Furthermore, the Chinese data helped send the dollar sharply lower, Mr Ross said. Investors often buy gold as a hedge against dollar weakness, plus a weaker greenback makes all dollar-denominated commodities cheaper in other currencies and thus can help demand. As the gold pit was closing, the euro was up to $US1.4515 from $US1.4414 late Friday.

Carlos Sanchez, associate director of research with CPM Group, commented that gold continues to find strong investor interest at the state of the new year amid ongoing concerns about economic conditions and financial-market concerns.

This especially is the case since gold is down from the record highs hit in early December, prompting some to use the pullback as a buying opportunity, Mr Sanchez said. The metal fell during much of December largely on selling to square positions ahead of year-end.

Also, demand for physical gold in India has reportedly picked up due to both the pullback in the dollar-denominated price of gold over the last month plus an appreciation of the Indian rupee, both of which make gold more affordable for Indians, Mr Sanchez explained.

Chart-based buying occurred as February gold broke up through the $US1040 area, Mr Sanchez said. This had emerged as chart resistance after the market stopped slightly on either side of this during the three previous trading days, and often breaks of such resistance triggers buy stops, or pre-placed orders activated when certain chart points are hit.

This helped February gold peak at $US1163 in overnight screen trading, its most muscular level since December 8. The next major chart resistance for the February futures is the life-of-contract high of $US1227.50 hit on December 3, Mr Ross said.

The strong Chinese import figures were especially supportive for those precious metals with more industrial applications, including silver, platinum and palladium, Mr Sanchez said. Most-active March silver settled up US22.5 cents to $US18.695 an ounce and hit a high of $US18.925 that was its strongest level since December 4. Mr Ross put the next major chart resistance at the December 3 high of $US19.50.

Meanwhile, April platinum rose $US21.90 to $US1592.50 an ounce, while March palladium gained $US6.80 to $US431.95.

"Platinum and palladium have been getting an extra boost from the ETFs launched in the US market," Mr Sanchez said.

ETFS Physical Platinum Shares and ETFS Physical Palladium Shares began trading Friday on the New York Stock Exchange Arca platform and were the first exchange-traded funds for the platinum group metals in the US.

They create additional investment demand since physical metal is put into storage to back ETF shares that trade like a stock but are meant to track the price of the commodity.

April platinum hit a contract high of $US1596.30 an ounce, while spot-month metal hit its strongest level since August 2008.