LONDON, Sept 12: Gold and oil jumped on Tuesday, while base metals stabilised as big investors saw the previous day's hefty sell-off as a buying opportunity.

Heavy fund selling kicked almost every market lower on Monday and the weakness spilled over into equities, with European stocks falling to their lowest in over a month as energy and mining shares were hit.

We are seeing the first declines in commodity (index) returns in this cycle, said Michael Lewis, global head of commodity research at Deutsche Bank.

Prices, as gauged by the Reuters/Jefferies CRB Index, fell 2.08 per cent to their lowest since November 2005. The Goldman Sachs Commodity Index, seen as the benchmark for commodity investment, has fallen 13.5 per cent in the past month.

People are talking about going from boom to bust and I think that has been triggered partly by the sell-off but also by the falling commodity returns. Lewis was looking for more short-term weakness in preciousmetals, with possibly a move down to $530 an ounce in gold, but said oil should stabilise.

He said Deutsche remained bullish on agricultural products but was more cautious about industrial metals, especially aluminium as demand may be hit by slowing economic growth.

I wouldn't say we'll actually get there ($60), but any move towards there would I think trigger some sort of action by Heavy losses to two-month lows attracted bargain hunters overnight in precious metals.

If anyone in January had said gold priced at just under $600 an ounce was a bargain who would have believed it? But that's just what's happened, said Australia & New Zealand Bank commodities specialist Andrew Harrington.

Gold rose to $596.00/597.00 an ounce after falling as much as 4.6 per cent to $582.60 an ounce on Monday.

Next month's start of the Indian wedding and festival seasons, typically times of high gold consumption, was helping combat sentiment among investors that now was the time to sell.

Gold's improved fortunes pulled silver nearly two per cent higher, with platinum and palladium also posting modest gains.

London Metal Exchange copper futures gained one per cent to $7,555 a ton, while zinc rose to $3,300 from $3,260. Aluminium failed to follow suit and gave back $21 to $2,479.—Reuters