Silver leads China-based metals rally Silver capped its strongest four-day move in two years on Monday as it led a continued rally across metals markets on a reappraisal of the outlook for Chinese growth. The precious metal, whose demand is largely industrial but nonetheless tends to move closely in line with gold, rose 4.2 per cent on Monday to a two-month high of $21.39 a troy ounce. It has rallied nearly 10 per cent in four trading days - the largest such move since the wild days of 2011 when the so-called "devil's metal" surged to nearly $50 only to crash to $26 a few months later. The surge higher came amid a widespread repositioning in metals markets, on the back of Chinese data showing stronger than anticipated imports, industrial production, and investment in July. Gold rallied 1.7 per cent to $1,335.66 a troy ounce; platinum hit a two-month high of $1,507.50 a troy ounce; and industrial metals from aluminium to nickel also continued last week's bounce. Investors had been betting on lower prices for industrial and precious metals alike, believing that slower Chinese growth would weigh on the markets. However, last week saw the largest reduction in short positions in gold in a single week since June 2000, according to Suki Cooper at Barclays. The SPDR Gold Trust, the largest gold exchange-traded fund, saw its first daily inflow since June. Outflows from the fund have been a driver of gold's tumble of nearly 30 per cent from the start of the year to a low of $1,180 in June. Ms Cooper warned, however, that this could spell further price falls: "Although short positions remain elevated, leaving scope for additional short covering activity, changes in the market perception with respect to Fed tapering or weaker than expected data could trigger a re-establishment of the record gross shorts, exacerbating the downside for gold prices." However, analysts were more upbeat on the prospects for other precious metals which are more likely to fare well in a recovering global economy. "We expect that silver could start to outperform gold given the ongoing improvement in global growth conditions," said analysts at Deutsche Bank. "Short covering remains a possibility," added Walter de Wet, head of commodities research at Standard Bank, noting that according to US Commodity Futures Trading Commission data, the speculative market "has been building a large short position which is yet to unwind," although he added that he expected any rally to fade at about $23.20 a troy ounce.