Gold set for biggest daily gain since 2008, silver also rebounds

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Gold jumps over 5%, silver up over 9%

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Analyst sees gold resuming longer-term rise

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No US employment report on Friday due to partial government shutdown

By Anmol Choubey

Feb 3 - Gold and silver prices rebounded sharply on Tuesday after a steep selloff over the previous two sessions, with the bullion on track for its biggest daily rise since November 2008 as bargain-hunters stepped in amid resilient underlying fundamentals.

Spot gold rose 5.2% to $4,906.82 per ounce by 01:31 p.m. ET , recovering from Monday's low of $4,403.24 but still trading below last week's record high of $5,594.82. U.S. gold futures for April delivery settled 6.1% higher at $4,935 per ounce. Silver surged 4.8% to $83.23 an ounce on Tuesday, after a record 27% one-day decline on Friday and falling a further 6% on Monday.

"I view the recent losses as corrective within the long-term uptrend," said Peter Grant, vice president and senior metals strategist at Zaner Metals. He added many of the fundamentals that have driven gold higher over recent years remain firmly in place.

"At this point, we are likely to see a period of consolidation, with $4,400 an important support level on the downside and resistance probably around $5,100 on the upside," Grant said. Precious metals retreated sharply over the past two sessions as Kevin Warsh was named the next head of the Federal Reserve, after Chair Jerome Powell steps down in May. Investors expect Warsh to support rate cuts but tighten the Fed's balance sheet. Additionally, the CME Group raised margin requirements on precious metal futures, which further weighed on prices. Despite the recent volatility, analysts broadly expect the bull market to continue, with the yellow metal likely to hit fresh peaks later this year.

"We expect prices to resume their longer term rise at a more sustainable pace as investors continue to be extremely concerned about economic and political conditions," said CPM Group managing partner Jeffrey Christian.

Gold is widely regarded as a safe haven and typically performs well in low interest rate environments. Meanwhile, the U.S. Bureau of Labor Statistics said on Monday the closely watched employment report for January would not be released this Friday due to a partial shutdown of the federal government. Among other metals, spot platinum climbed 3.4% to $2,194.05 per ounce, while palladium was up 0.4% at $1,727.03.

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