* Gold hits record high for second day as oil soars
* Arab League gathers in Cairo to discuss Libya violence
* Silver hits fresh 31-year high; big ETF reports inflow
* Coming up: U.S. initial jobless claims data Thursday
(Recasts, adds graphic, details, updates prices)
By Frank Tang
NEW YORK, March 2 (Reuters) - Gold ended flat on Wednesday
after hitting a record high above $1,440 an ounce on safe-haven
buying spurred by political unrest in Libya, surging oil prices
and testimony by the Federal Reserve chief that kept investors
expecting U.S. monetary policy to stay loose.
Gold has rallied 10 percent since late January when
tensions began to flare in the Middle East and Africa. Muammar
Gaddafi on Wednesday launched a land and air offensive to
retake territory from rebels in Libya's eastern region, and the
possibility of a prolonged civil war fueled bullion demand as a
hedge against uncertainty. []
"You have political problems all over the world, a Federal
Reserve bank that still erred on the side of easing rather than
tightening, rising commodities prices in general, and growing
disdain for fiat currencies generally," said Dennis Gartman,
author of the Gartman Letter, a daily investment newsletter.
"It will be illogical for gold not to be going higher," he
said.
Spot gold <XAU=> hit a session peak $1,440.10 an ounce, a
record for the second straight day. It finished about 10 cents
higher at $1,433.81 an ounce by 3:33 p.m. EST (2033 GMT). The
metal was fixed at $1,435.50 an ounce in London.
U.S. gold futures for April delivery <GCJ1> settled up
$6.50 at $1,437.70, with volume slightly higher than the
previous session but lower than its 30-day average.
Recent lower-than-usual turnover during gold's gains
prompted some analysts to question whether record bullion
prices are sustainable.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Gold is building on a 6 percent rise in February, its
biggest one-month climb since August, triggered by unrest
across the Arab world which unseated leaders in Tunisia and
Egypt before spreading to Libya, Bahrain, Yemen, Oman and
Iran.
Two U.S. warships were passing through the Suez Canal,
heading for the waters off Libya to pressure the country's
ruler to step down.
Gold's record close on Tuesday confirmed that its long-term
uptrend has resumed, and the next technical resistance level is
near that rising trendline at $1,487 an ounce, CitiFX said.
(Graphic: http://link.reuters.com/faw38r)
Traders said gold was also supported by expectations of a
continuation of easy monetary policies by the Fed.
In testimony to the Congress, Fed Chairman Ben Bernanke
said the surge in oil prices should lead to only a modest,
temporary increase in U.S. inflation "at most." That fed the
view that the Fed will continue the loose monetary policy that
has encouraged inflation-wary investors to buy gold.
OIL SURGES, STOCKS REBOUND
Wall Street turned higher after data showed employers added
more jobs than expected last month. Violence in the Middle East
and North Africa has cooled the appetite for equities but
driven up prices for oil and safe haven assets.
U.S. Treasuries, German government bonds and the Swiss
franc have all risen since political tensions began to flare in
the region in February. [] [] []
Oil's rally could boost gold, analysts said, if higher
energy prices appear to curb global growth.
U.S. crude futures rose above $102 a barrel on news of an
airstrike in Libya near an oil terminal, as markets braced for
what could be a prolonged disruption. []
The positive correlation between gold and oil has
strengthened in the last five sessions, but the longer-term
link between the two remained largely erratic.
Silver <XAG=> rose to a peak of $34.96 an ounce, its
strongest level since early 1980. It later eased 0.3 percent to
$34.54 an ounce.
Holdings in the world's largest silver exchange-traded
fund, the iShares Silver Trust <SLV>, rose to 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. []
Platinum <XPT=> gained 0.4 percent to $1,846.74 an ounce
and palladium <XPD=> climbed 0.3 percent to $816.97.
Prices at 3:33 p.m. EST (2033 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCJ1> 1437.70 6.50 0.5% 1.1%
US silver <SIK1> 34.835 0.408 0.0% 12.6%
US platinum <PLJ1> 1859.30 14.20 0.8% 4.6%
US palladium <PAM1> 822.65 5.95 0.7% 2.4%
Gold <XAU=> 1433.81 0.11 0.0% 1.0%
Silver <XAG=> 34.54 -0.12 -0.3% 11.9%
Platinum <XPT=> 1846.74 8.25 0.4% 4.5%
Palladium <XPD=> 816.97 2.50 0.3% 2.2%
Gold Fix <XAUFIX=> 1435.50 5.00 0.3% 1.8%
Silver Fix <XAGFIX=> 34.75 38.00 1.1% 13.5%
Platinum Fix <XPTFIX=> 1846.00 9.00 0.5% 6.6%
Palladium Fix <XPDFIX=> 821.00 7.00 0.9% 3.8%
(Additional reporting by Jan Harvey in London; editing by Jim
Marshall and David Gregorio)
