Gold ticked up as the US dollar slipped against other currencies and physical demand picked up, while silver was steady near its strongest since early 2008 on hopes of a recovery in the global economy.
Palladium, used in jewellery and autocatalysts, hit a four-month high on fund buying related to gains in equities and base metals, lifting sister metal platinum.
Spot gold added $US4.20 an ounce to $US1249.45 an ounce after a lacklustre trade on Monday. Gold struck a record around $US1294 an ounce in June.
"Physical demand is picking up, mostly in India and China, as people are trying to finish their Christmas orders," said Dick Poon, manager at Heraeus in Hong Kong. "It's already September."
US gold futures for December delivery rose $US4.2 an ounce to $US1251.3 as dealers shrugged off a slight decline in holdings in the world's largest gold-backed exchange-traded fund.
SPDR Gold Trust said its holdings dropped to 1292.619 tonnes by Sept 13 from 1293.531 tonnes by Sept 10. The holdings hit a record 1320.436 tonnes on June 29.
The dollar was near a one-month low against a basket of currencies after suffering its steepest fall against the euro in two months the previous day on investors' rising risk appetite.
Silver was steady at $US20.13 an ounce, having hit a high at $US20.22 on Monday, its highest since March 2008, as rallies in equities and a 13.9 per cent rise in China's industrial output boosted industrial metals.
But dealers said there was a lack of physical buying in silver, which is used in jewelery, photography and electronics, while gains in platinum group metals were also driven by fund buying.
"So far we have never seen any strong buying of palladium from the industrial sector," said a physical dealer in Tokyo, who trades platinum group metals. "I suppose there's some buying by funds and investment banks."
The Nikkei was almost unchanged after hitting a three-week closing high the day before, but sentiment was upbeat as US stocks advanced to their highest levels in five weeks on Monday on upbeat Chinese factory data and new global banking rules.
In the energy market, oil was steady near one-month highs ahead of inventory reports expected to show crude stock draws as the shutdown of the biggest Canada-US pipeline entered a fifth day.
Reuters