LONDON, Sept 17: Gold climbed on Wednesday, in tandem with other commodities, as the US Federal Reserve’s rescue of troubled insurer American International Group (AIG) gave battered financial markets a bit of a respite.

It’s a breather, a temporary relief,” said a commodities analyst who preffered not to be named. ...It’s just a matter of time before things will start heating up again.

Bullion was lifted by hopes that more stable financial markets might help revive interest in beaten-down commodities and by the dollar’s fall against the euro, even though a 1 per cent slump in the yen suggested limited demand for safer havens like gold.

Other precious metals jumped broadly, with spot platinum climbing more than 5 per cent to as high as $1,110 per ounce at one point after having dived 10 per cent on Tuesday.

Spot gold rose 0.6 per cent to $782.50 an ounce as of 1000 GMT from Tuesday’s nominal close in New York, recovering from the previous day’s $3 fall as risk-averse investors rushed to dump all commodities in a bid to reduce exposure to risk.

Gold has been whipsawed in recent weeks by rapidly shifting investor perceptions over whether it remains a safe-haven asset or whether it is part of a riskier commodities pool.

The US Federal Reserve said in a statement it would extend AIG $85bn in exchange for a nearly 80pc stake to bail it out.

Platinum jumped more than 5 per cent on short covering, offsetting a near 10 per cent plunge the previous day.

But sentiment remained gloomy as many believe that the latest financial crisis in the United States could cause the global economy to slow further, crimping demand for the white metal, mainly used in autocatalysts, traders said.

Spot platinum was trading at $1,077.50/1,107.50 per ounce, up 2.7 per cent from Tuesday’s close in New York. It struck a record high of $2,290 an ounce in March.

Spot palladium was trading just under half a per cent higher at $222/228 an ounce, after tumbling more than 5 per cent the previous day. Spot silver gained 1.4 per cent at $10.59/10.65 from Tuesday’s close of $10.44.

—Reuters