Gold and silver prices rose Tuesday after China increased interest rates to curb inflation and slow economic growth.
Silver for March delivery settled up 92.8 cents, or 3.2 percent, to $30.271 an ounce. April gold added $15.90 to settle at $1,364.10 an ounce.
This is the third time China has raised interest rates since October. Its inflation rate hit a 28-month high of 5.1 percent in November before moderating in December. Government leaders fear a sharp rise in prices for things like food and fuel could trigger unrest.
The decision is prompting more investors to buy gold and silver because of concerns about inflation, said Dave Meger, vice president of metals trading at Vision Financial Markets.
Some other countries, including Indonesia and Brazil, also have raised rates in an effort to control inflation. Precious metals are considered hedges against inflation and slow growth.
In contracts for March delivery, copper slipped 0.10 cent to $4.5740 a pound and palladium rose $19.40 to $838.45 an ounce. April platinum gained $17.70 to settle at $1,861.90 an ounce.
In other commodities trading, oil prices fell after China's rate hike was announced. Benchmark crude for March delivery fell 54 cents to settle at $86.94 per barrel on the New York Mercantile Exchange.
China's rate hike decision also affected oil and other energy contracts.
Although many oil traders expected the interest rate hike, the concern is how much it might eventually reduce China's oil demand. "That was one of the main pillars of the current (oil) price," said Michael Lynch, president of Strategic Energy & Economic Research.
Benchmark crude for March delivery fell 54 cents to settle at $86.94 per barrel on the New York Mercantile Exchange.
In other Nymex trading for March contracts, heating oil rose 2.57 cents to settle at $2.7318 per gallon, gasoline futures rose 4.37 cents to settle at $2.4942 per gallon and natural gas fell 6.4 cents to settle at $4.04 per 1,000 cubic feet.
In agricultural contracts for March, wheat rose 15.5 cents to settle at $8.7425 a bushel, corn fell 1 cent to settle at $6.7375 a bushel and soybeans rose 9.75 cents to settle at $14.3425 a bushel.
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