Gold gains on value bets.

GOLD rose today as the optimistic economic sentiment that boosted commodities and equities spread to precious metals.

The most actively traded gold contract, for August delivery, settled $US3.80, or 0.3 per cent higher, at $US1198.90 an ounce on the Comex division of the New York Mercantile Exchange. Futures continued higher in electronic activity after the settlement, breaking above $US1200.
Investors who cashed out of the market following gold's record highs in June started to trickle back today, buying at perceived bargain prices and boosting futures, said Michael Gross, broker and futures analyst with OptionSellers.com.
Unlike US equities, which are down more than 5 per cent year-to-date, gold futures have outperformed almost all assets, setting records in May and again in June.
The metal is thought by some to hold its value better than other assets amid uncertain economic prospects, and the same growth worries that pressured equities this year sent gold higher.
But the pullback in equities markets at the end of last week didn't spare precious metals futures, which were dumped along with other assets as fears of a double-dip recession rippled across markets. Gold is down about 5 per cent from its all-time highs set three weeks ago.
Mr Gross said no new news had emerged this week to change the economic picture, but traders thought precious metals futures were undervalued following the rush to offload assets last week.
Despite last week's sell-off, many traders who had made bullish bets on gold remain, lending continued support to the metal, said Adam Klopfenstein, senior market strategist with Chicago-based Lind-Waldock, a division of MF Global.
Investors who are still interested in hedging against European debt concerns or an economic slowdown "are in it for the long haul," he said. "Those people are still in the market."
Silver futures, which analysts said also may have been oversold at the end of last week, led the rise in precious metals. Comex September silver settled up US14.3 cents, or 0.8 per cent, at $US18 an ounce.
Meanwhile, Nymex platinum and palladium showed modest gains, rallying with industrial commodities like oil and copper. The metals are tied to the global growth outlook more closely than gold because of their uses in catalytic converters.
October platinum settled $US7.70, or 0.5 per cent higher, at $US1526.40 an ounce. After jumping by more than 3 per cent the previous day, September palladium rose $US1.95, or 0.4 per cent, to $US442.35 an ounce.