Spot platinum was up 4.6 percent at $940.80 by 1500 GMT, while sister metal palladium rose 4.7 percent to $710.30. "The repositioning in the futures market in the dying weeks of last year saw in platinum a rebuilding in the gross short position, and at the same time long positioning remaining fairly steady," said Mitsubishi analyst Jonathan Butler. "Right now I think this is some short-covering driving prices higher.
"It's the start of the year, and there are some funds rebalancing their portfolios. There might be some niche funds that are interested in these metals, so that is part of the mix as well." Palladium was the best-performing precious metal last year, with the price rising 20 percent for its biggest annual gain in six years. Platinum lagged gains in the wider complex, however, ending 2016 only 1 percent higher.
Both metals are widely used in autocatalyst manufacturing, and are more exposed than gold to the economic cycle. Spot gold was flat at $1,151.66 an ounce, while US gold futures for February delivery were up 90 cents at $1,152.60. The metal fell sharply in the wake of Donald Trump's victory in November's US presidential election, sliding by more than 12 percent in the fourth quarter.
Trump's victory boosted the dollar and sparked a sharp rally in bond yields, lifting the opportunity cost of holding non-yielding gold and blunting investors' appetite for the metal. "The market has carried the theme of higher dollar, yield and stocks into 2017 - a formidable challenge to gold," said Saxo Bank's head of commodity research, Ole Hansen. Indications from the US Federal Reserve that it would press ahead with further interest rate rises this year are buoying the dollar and pressuring gold. A strong start to 2016 meant that gold still managed to end last year with its first annual gain since 2012, rising by 8.5 percent. Silver was up 0.8 percent on Tuesday at $16.06 an ounce.