Gold was slightly higher to the mid-point of the London session yesterday, when it rose sharply to its intraday high of $844, but the rally was abruptly capped in the second hour of New York trading, with sellers driving the price back to $825 before the metal showed a little late strength into a finish at $833.70, up $7.50. Overnight, gold has edged higher.

Platinum had a second strong day in a row and, though it came off its highs around $1480, still ended with a nice gain at $1455/oz., up $26. Overnight, platinum is trending higher.

Silver followed gold’s pattern pretty closely, with its bounce coming off of the $13.50 mark, as it moved upward from there to close at $13.66/oz., up 20 cents. Overnight, silver is sharply higher.

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Precious metals bugs had to be pleased with the day’s results, as the usual suspects were lined up solidly against the metals, with the dollar strengthening, crude dropping and equities on the rise.

Yet they all still posted gains.

Gold probably got some support from its safe haven status, as geopolitical tensions “are not doing much to help confidence in already nervous markets,” said Mark O’Byrne, executive director of Gold & Silver Investments.

Tensions rose yesterday on a report out of France that the European Union is considering sanctions against Russia following its recognition of independence for the Georgian territories of South Ossetia and Abkhazia.

Also factoring in was the perception that the dollar, despite yesterday’s gains, may start to fall again against the euro. “Gold looks very strong,” said Matt Zeman, of LaSalle Futures Group in Chicago. “The dollar is very vulnerable and stalling out.”

UBS put out a “strong tactical” buy recommendation, its first such in a year. UBS analyst John Reade said gold is poised to rise now that hedge funds and large speculators have sold off their positions.

“Substantial long liquidation has occurred in the Comex, Tocom, and over-the-counter markets although exchange-traded fund holders remain resolute,” Reade wrote yesterday. The latter statement was backed by action in the bullion-backed SPDR Gold Trust (NYSE:GLD), whose assets have declined only 7.7% over the past month and a half, while the metal has dropped 13%.

“Over the past three weeks,” Reade added, “we have noted unprecedented physical gold demand from India, some European consumers and other Asian clients. Finally, the dollar appears to have topped out for now.”

Reade last recommended investors buy gold when the metal traded around $660 in August 2007.

Source: Precious Metals Push Higher