Gold prices have risen to a 15-week high and silver has rallied for the 11th straight session, as stronger-than-expected data from China continue to defy expectations that one of the world's largest consumers of precious metals is seeing an economic slowdown.
China attracted $US10.76 billion ($A11.95 billion) of foreign direct investment in January - up 16.1 per cent on year, the country's Ministry of Commerce said.
Those numbers come on the heels of trade data released last week that showed an unexpected surge in both imports and exports, yet another sign of health in an economy that was predicted to slow after decades of rampant growth.
Although investors often view Chinese data as prone to distortion, the upbeat reports have been enough to further fuel a rally that has seen gold rise nearly 10 per cent since the beginning of the year, amid investor concerns that a flagging US recovery may slow the pace at which the Federal Reserve rolls back its stimulus program.
Gold is often used as a hedge against economic uncertain and weakness in the US dollar, which has been weighed upon by the Fed's bond buying policy.
The string of US data disappointments continued on Tuesday when the housing market index, a closely watched indicator of confidence among US home builders, plunged to its lowest level in nine months in February.
Sharp pullbacks in US stocks over the past few weeks and uneven economic data have "helped investors see value in a once beaten down market," said Bill Baruch, a strategist at iiTrader.com.
"The China data also helps give a good, positive feeling to commodities," Baruch said.
Prices for gold were down 28 per cent in 2013, ending a 12-year bull run.
The most actively traded contract, gold for April delivery, on Tuesday rose for a 10th straight session to trade at $US1324.40, a gain of 0.4 per cent. It was the highest level since October 31 for the precious metal.
Silver prices rose 2.2 per cent to close at $US21.898, their highest level since November 6, bolstering the case for a continued rally in precious metals.
Some investors cautioned against being overly optimistic about the current rally in gold and silver, arguing that some of the anemic US data can be attributed to a period of frigid temperatures across much of the country this winter.
"There is certainly a great deal of momentum going on," said Bob Haberkorn, a senior commodities broker with RJO Futures.
"Much of it, however, is traders looking to the Fed, and the Fed won't make any changes in policy unless these numbers continue for at least a few more months."
Concerns of a flagging recovery came back into focus last week, when US retail sales for January came in much weaker than expected, while the number of Americans filing new claims for unemployment benefits rose last week, the latest sign of an unsteady labour market. Those followed disappointing job growth in December and January.
London PM Gold Fix: $US1320.75; previous PM $US1327.50
Apr gold $US1,324.40, up $US5.80; Range $US1312.30-$US1332.40
Mar silver $US21.898, up $US47.70 cent; Range $US21.315-$US21.970
Apr platinum $US1,424.50, down $US5.60; Range $US1,416-$US1,434
Mar palladium $US737.15, down $US4.50; Range $US729.35-$US742
