* 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, adds comment)
By Jan Harvey
LONDON, March 2 (Reuters) - Gold hit a record high above
$1,436 an ounce on Wednesday as violence in the Middle East and
North Africa supported interest in the precious metal as a haven
from risk, and as U.S. oil prices jumped above $100 a barrel.
Spot gold <XAU=> was bid at $1,434.20 an ounce at 1418 GMT
against $1,433.70 late in New York on Tuesday, having earlier
peaked at an all-time high of $1,436.40. U.S. gold futures for
April delivery <GCJ1> rose $3.60 to $1,434.80.
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.
"(There is) a combination of reasons for (the rise in) gold,
but primary at the moment are strong oil and weak equities --
basically geopolitical," said Simon Weeks, head of precious
metals at the Bank of Nova Scotia.
"I think we see $1,450, and that's probably enough," he
added. "Any good news from the Middle East will see a pullback
to $1,400."
Muammar Gaddafi launched an offensive to retake territory
in Libya's east on Wednesday, sparking a rebel warning that
foreign armed forces might be needed to "put the nail in his
coffin" and end his long rule. []
The United States has sent warships towards Libya and
Secretary of State Hillary Clinton has said the country and its
NATO allies are still considering a "no-fly" zone over Libya,
though Western states appear hesitant to stage an intervention.
In opening remarks to a meeting of Arab foreign ministers in
Cairo on Wednesday, Iraqi Foreign Minister Hoshiyar Zebari said
the Libya crisis is an internal Arab affair and foreign powers
should refrain from any intervention. []
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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 $34.87 an ounce,
its strongest level since early 1980, before edging back to
$34.81 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 $1,841 an ounce against
$1,838.49, while palladium <XPD=> was at $817.97 versus $814.47.
(Reporting by Jan Harvey; editing by Anthony Barker)
