* Arab League gathers in Cairo to discuss Libya violence
* Stocks wilt on Mideast tensions; bonds, Swiss franc rise
* Silver hits fresh 31-year high; largest ETF reports inflow
(Updates prices)
By Jan Harvey
LONDON, March 2 (Reuters) - Gold prices ground against
resistance near the previous session's record high on Wednesday,
as violence in the Middle East and North Africa supported
interest in the precious metal as a haven from risk.
While gold's price rally has lost momentum as some investors
cashed in the previous session's gains, fresh unrest in the
region is likely to reignite its run higher, analysts said.
Spot gold <XAU=> was bid at $1,432.90 an ounce at 1229 GMT
against $1,433.70 late in New York on Tuesday, having peaked
that day at an all-time high of $1,434.65. U.S. gold futures for
April delivery <GCJ1> rose $1.90 to $1,433.10.
"Ever since things started to happen in the Middle East, you
have seen this recovery from the mid-$1,300s back to record
highs... driven by safe-haven flows," said RBS Global Banking &
Markets analyst Daniel Major.
He said the resilience of gold's move higher would depend on
it breaking substantially above its previous trading range.
"What will decide that will be how things pan out in the
Middle East," he said. "Should we see a calming of the political
situation there, there is a risk to the downside, but should we
see things escalate and we break above the level we are at at
the moment, there is the potential for more to come."
Gold is building on a 6 percent rise in February, its
biggest one-month climb since August. This came on the back of
unrest that unseated leaders in Tunisia and Egypt before
spreading to Libya, Bahrain, Yemen, Oman and elsewhere.
The region continues to simmer.
Forces loyal to Muammar Gaddafi launched a major fightback
in Libya's east on Wednesday, sparking a rebel warning that
foreign military help might be needed to "put the nail in his
coffin" and end his long rule. []
Arab League foreign ministers meet later at an extraordinary
session in Cairo and are expected to reinforce their
condemnation of Gaddafi. []
Meanwhile a Suez Canal official said two U.S. amphibious
assault ships, the Kearsarge and the Ponce, had entered the
canal on Wednesday on their way to the Mediterranean.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For graphics on the unrest in the Middle East and North
Africa: http://r.reuters.com/nym77r
For graphic showing the oil price impact on GDP:
http://r.reuters.com/jux28r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
RISK APPETITE WANES
Violence in the region cooled appetite for assets seen as
higher risk, like stocks, and boosted so-called safe havens like
German government bonds, the Swiss franc and gold. []
[] []
It also fuelled further gains in oil. Brent crude rose
towards $116 a barrel on Wednesday after settling at a near
2-1/2 year high, while U.S. crude edged above $100. []
Rising oil prices are set to support gold, analysts said, if
they look likely to curb global growth. "They could very well
impact (growth in) Europe, the United States as well, and indeed
China," said VM Group analyst Carl Firman.
"That will give rise to uncertainty, it will lower demand
predictions for, for instance, copper, and where it knocks
industrial metals and equities, gold will probably benefit."
Elsewhere silver <XAG=> rose to a peak of $34.77 an ounce,
its strongest level since early 1980, before edging back to
$34.73 an ounce against $34.66.
Holdings in the world's largest silver exchange-traded fund,
the iShares Silver Trust <SLV>, rose to 10,693.68 tonnes on
March 1, their highest since Jan. 14. []
The trust reported a slight recovery in its holdings last
month after they posted their biggest ever one-month fall in
January. []
Meanwhile platinum <XPT=> was at $1,836.99 an ounce against
$1,838.49, while palladium <XPD=> was at $817.97 versus $814.47.
(Reporting by Jan Harvey; editing by Anthony Barker)
