* Resistance seen for gold near Thursday's record $1,447/oz
* Simmering euro zone debt worries, Mideast violence support
* Holdings of largest silver ETF leap to record
(Updates prices, adds comment)
By Jan Harvey
LONDON, March 25 (Reuters) - Gold rose on Friday as
deepening concerns over euro zone sovereign debt levels after a
fresh downgrade of Portugal's credit rating and simmering
violence in the Middle East underlined its safe-haven appeal.
Spot gold <XAU=> was bid at $1,434.20 an ounce at 1535 GMT,
against $1,429.49 late in New York on Thursday. U.S. gold
futures for April delivery <GCJ1> eased 50 cents to $1,434.40.
The precious metal is struggling to overcome strong
resistance near the previous session's record high of $1,447.40
but remains firmly supported at current levels, analysts said.
"The Portuguese debt issue got everyone extra jittery," said
Societe Generale analyst David Wilson, who added that the
sustainability of the rise would depend on how quickly bailout
negotiations were resolved and on the Middle East situation.
Worries about the financial health of heavily indebted
Portugal were stoked by a two-notch downgrade of the country's
credit ratings by Standard & Poor's, a day after Prime Minister
Jose Socrates resigned. []
The euro <EUR=> eased 0.2 percent against the dollar in
mid-afternoon trade, while Portuguese borrowing costs hit new
highs on Friday following the ratings cut. [] []
European leaders agreed at a summit in Brussels on Thursday
to increase their financial rescue fund to 440 billion euros
($623 billion) by June but avoided discussing Portugal, which is
under pressure to seek a bailout after Socrates' resignation.
[]
"The EU summit in Brussels has once again revealed the lack
of unity of state and government heads: the financing of the
current EU rescue fund remains uncertain and the payments into
the projected capital stock for the future bailout mechanism
have been changed again," Commerzbank said in a note.
Violence in the Middle East and North Africa also supported
demand for gold as a haven from risk.
Rebel gunners fought artillery duels with Muammar Gaddafi's
forces in eastern Libya on Friday, while a witness told Al
Jazeera that Syrian security forces had killed at least 20
people in the town in Sanamein. [] []
CHART RESISTANCE
For the moment, the metal remains constrained by chart
pressures, with strong resistance seen near Thursday's record
high.
"(Gold) managed to make fresh highs, but that lack of
follow-through was a bit of a disappointment," said
ScotiaMocatta in a note. "The metal traded up as high as 1,447
to set a fresh record ... (but) we think the move was a bit
forced."
Despite gold's recent strong performance, inflows into
exchange-traded funds backed by the precious metal remained
lacklustre, with holdings of the largest, New York's SPDR Gold
Trust <GLD>, down by another 0.9 tonnes on Thursday. []
They are so far on track to fall more than 65 tonnes this
quarter alone, which would be the fund's largest quarterly
outflow since it was launched in 2004. However, interest in
bullion from other sources is outweighing these outflows.
The People's Bank of China said on Friday that concerns
about inflation would trigger demand for gold as a store of
value, though it noted the precious metal's bull run may be near
its end. []
"Clearly, the PBoC has become quite concerned about
inflationary pressures, and with growing concerns across
developed markets and rising geopolitical conflict, they see the
yellow metal playing an important role as a store of value," UBS
said in a note.
Silver <XAG=> was at $37.43 an ounce versus $37.12, having
retreated from the previous session's 31-year high at $38.13 an
ounce. Holdings of the largest silver ETF, the iShares Silver
Trust <SLV>, leapt to a record 11,140 tonnes on Thursday.
Platinum <XPT=> was at $1,745.60 an ounce against $1,749,
while palladium <XPD=> was at $750 against $748.97.
(Editing by Jane Baird)
