London: Gold jumped 1 per cent on Tuesday after a pause in dollar and equity market rallies prompted a break above $1,280 an ounce that triggered chart-based buying, but anticipation of buoyant US data could temper interest.

Spot gold hit a session high at $1,290.80 an ounce in early trade as stop orders were triggered on a break of the 200-day moving average just above $1,280. Buy stop orders are automatic orders placed at preset levels to gain momentum if prices rise.

Prices rebounded from a two-month low of $1,273.06 on Aug. 21 on speculation of an eventual increase in US interest rates to trade up 0.8 per cent at $1,286.56 by 1146 GMT, while US gold futures rose $8.80 an ounce to $1,287.60.

Traders said the metal was likely to remain supported below $1,300 ahead of the expiration of Comex gold options for August later in the day.

“I think people went short gold when it broke below the 200-day moving average but I would be surprised if it is going to be able to sustain this rally,” Standard Bank analyst Walter de Wet said.

“The dollar, despite today’s pause, is quite strong and it looks like there is going to be quite a good durable goods number, which would give more signs of US growth and in turn weigh on gold.” The dollar was flat against a basket of major currencies, pausing after strong gains in the previous week, but was seen possibly taking a lift from the raft of US data due out later on Tuesday. Strategists are predicting a big jump in durable goods orders.

European shares ticked higher, but underperformed gains seen over the past two sessions after the European Central Bank President Mario Draghi fuelled expectations the central bank will embark on a large-scale asset buying scheme as soon as next week to boost the sagging Eurozone economy.

Tensions between Russia and Ukraine as well as violence in the Middle East helped lift prices, as the metal is usually seen as an insurance against financial and political risk.

Holdings of the SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, however, fell 0.4 per cent to 797.09 tonnes on Monday from 800.08 tonnes on Friday, reflecting selling based on the previous session’s price losses.

Physical buying from jewellers in Asia, which had moderately re-emerged with the fall in bullion prices in the previous week, dried up on Tuesday.

“The physical market is a bit quiet after a rush in buying yesterday, and we’ve got to see if the gain is sustainable or short-lived,” an Hong Kong dealer said.

Premiums for gold bars in Hong Kong rose to 70 cents to $1.10 to the spot London prices, higher than the 50 cents to $1.00 quoted late last week. In Singapore, premiums were steady at 80 cents to $1 an ounce to spot London prices.

Strength in gold propped silver higher — the metal rose 0.9 per cent to $19.48 an ounce. It hit a two-month low of $19.25 on Thursday.

Spot platinum, which touched its lowest since May 5 at $1,407.30 last week, was up 0.6 per cent at $1,419.74 an ounce, while spot palladium was down 0.5 per cent at $884.00 an ounce, having earlier traded $0.75 shy of a 13-1/2 year high of $900 hit in the previous week.