LONDON, Oct 14: Gold and other precious metals rose on Tuesday as fresh plans to stabilise the banking sector sparked a rally in commodities, with platinum up more than 6 per cent and silver climbing 4 per cent.

But analysts said gold could come under pressure in later trade if equities extended their gains, curbing interest in the precious metal as a haven from risk.

Spot gold jumped 2 per cent to a session high of $853.50 an ounce and settled back to $850.60/853.60 against $830.80 in late New York trade on Monday.

Both equities and commodities bounced after the announcement, with European shares rising more than 5 per cent, tracking a sharp rise in Asian markets.

Rising crude prices boost interest in gold as a hedge against oil-led inflation, and enhance the appeal of commodities as an asset class.

But analysts fear a recovery in the stock markets could pressure gold if it continues. The precious metal has held up well in recent weeks as stocks sold off, with investors buying gold as a haven from risk. That position may now be reversed.

The normal fundamental factors are again playing a stronger role, while flows out of the save haven might still be negative for gold, said investment bank Dresdner Kleinwort in a note.

Among other precious metals, silver tracked gold higher to rise 4 per cent at its session high of $11.10 an ounce. Silver, which is primarily viewed as an industrial metal, is also benefiting from hopes more stable markets could support demand.

Spot silver was at $10.92/11.00 an ounce against $10.66 in late New York trade on Monday. Platinum and palladium, which are also largely traded as industrial metals, climbed, with platinum gaining more than 6 per cent to its session high of $1,040 an ounce.

Both metals have posted sharp losses in recent months as investors worried about the demand outlook for the car industry, which accounts for around half of total platinum demand. This could curb further gains, analysts say.

With real demand still under pressure, people might be a bit scared to take substantial long positions (in platinum), said Standard Bank’s de Wet.

Spot platinum was at $1,021.50/1,041.50 an ounce, up from $978.50 in late New York trade on Monday, while palladium was at $202.50/210.50 an ounce against $196.50.—Reuters