* Dollar retreats as traders anticipate ECB rate hike
* Oil prices climb on Mideast, North Africa unrest
* Silver extends gains to fresh 31-year high
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, April 4 (Reuters) - Gold rose back above $1,430 an
ounce in Europe on Monday as oil prices climbed and the dollar
eased, and as traders anticipate a rate hike from the European
Central Bank may lead to further weakness in the U.S. unit.
Rising interest rates are generally negative for gold, as
they raise the opportunity cost of holding non-yielding assets,
but real rates are expected to remain depressed by rising
inflation.
Spot gold <XAU=> was bid at $1,434.30 an ounce at 0907 GMT,
against $1,427.98 late in New York on Friday. U.S. gold futures
for April delivery <GCJ1> rose $6.70 an ounce to $1,434.80.
"There are a couple of things driving gold prices at the
moment, and these are not short-term arguments," said
Commerzbank analyst Daniel Brisemann.
"One thing is the probable ECB rate hike, given the
inflation outlook. Other things are geopolitical risks in North
Africa and the Middle East, as well as the weak U.S. dollar."
"These things altogether account for the recovery in gold
prices today," he added. "Probably the downward move on Friday
was seen as exaggerated by many market players, and they took
the lower price as an opportunity to get into gold."
The euro hit fresh five-month peak against the dollar on
Monday with markets all but certain the European Central Bank
will raise interest rates later this week. []
Analysts say gold is benefiting from expectations that some
smaller euro zone economies like Portugal and Ireland will
continue to struggle with sovereign debt, especially if the ECB
presses ahead with a rate hike.
Rating agency Fitch cut Portugal's credit ratings by three
notches to BBB- late on Friday, one notch above junk, and
signalling further downgrades are likely.
In contrast, one of the Federal Reserve's most powerful
policymakers on Friday countered recent hawkish rhetoric from
some other Fed officials worried about inflation, saying he saw
no need for the central bank to reverse course.
OPINION SPLIT
William Dudley, president of the New York Federal Reserve
Bank, said the Fed was "still very far away" from achieving its
mandate of maximum sustainable employment and price stability,
although the economy is on a firmer footing. []
"Dudley's comments Friday underlined the lack of consensus
on the FOMC. This policy divide is gold-positive," said UBS
analyst Edel Tully in a note.
"Another flood of Fed views this week - Chairman Bernanke
and Chicago Fed President Evans (voter) speak today, as does
non-voter Lockhart; tomorrow brings voters Plosser and
Kocherlakota and the FOMC minutes, Wednesday Lockhard again,
Thursday non-voters Pianalto and Lacker - should give further
insight into where the balance of FOMC opinion resides."
"This, and Thursday's widely expected ECB rate hike, will be
gold's main drivers over the coming days."
Meanwhile, data released by the U.S. Commodity Futures
Trading Commission showed speculators in gold futures and
options raised their net long positions as prices rose to fresh
records last week. []
Rising oil prices also helped support gold. U.S. oil climbed
and North Sea Brent crude futures <LCOc1> rose more than $1 per
barrel to above $119.70 on concerns over oil supply as unrest
continued across North Africa and the Middle East. []
Among other precious metals, silver <XAG=> climbed to its
highest in 31 years at $38.40 an ounce, lifted by gold's gains
and expectations the economic recovery would benefit industrial
commodities. It was later at $38.31 an ounce against $37.74.
Among other precious metals, platinum <XPT=> was at
$1,766.24 an ounce against $1,765, while palladium <XPD=> was at
$777.50 against $769.95.
(Reporting by Jan Harvey; Editing by Alison Birrane)
