Silver scales 11-month high, gold rises as commodities rally

Silver surged nearly 3 per cent on Thursday, hitting an 11-month top and lifting gold with it, as commodities rallied on firmer oil prices and optimism over the Chinese economy.

Oil jumped 4 per cent overnight after data showed a smaller-than-expected increase in U.S. crude inventories, and added to those gains on Thursday, buoying sentiment.

Asian shares held near 5-1/2-month highs and the dollar retained gains from the prior session, but the risk appetite failed to dent the safe-haven appeal of precious metals.

Spot silver soared 2.8 per cent to $17.397 an ounce, its highest since May 2015. Gold rose as much 0.6 per cent to a session high of $1,251.01.

"There is more and more money coming into commodities," said a trader in Shanghai.

"Commodity prices of steel and other industrial metals are up sharply as Chinese economic data has become much better. Precious metals are rising with it, especially silver," he said.

Silver, used widely in manufacturing, has outperformed gold in recent days, helped by a break through chart resistance at its late October high on Tuesday and upbeat data from China.

Recent data from China has showed a surge in new debt fuelling a recovery in factory activity, investment and household spending. This has largely boosted industrial commodities.

London copper hit its highest in almost a month on Thursday, while Shanghai rebar jumped 7 per cent to its highest since September 2014.

"Silver and the PGMs (platinum group metals)... will outperform gold and enjoy positive fundamentals," said HSBC analyst James Steel. "Investors recognise these metals may be undervalued to gold."

Platinum rose 1 per cent on Thursday, trading near its highest in eight months. Palladium held near its highest in a month.

Bullion traders will be eyeing an ECB meeting later in the session for any impact on the dollar. The ECB is not expected to make any policy change at its rate-setting meeting on Thursday.

The focus will also be on US economic data that could affect the Federal Reserve's monetary policy.