* Gold gains 1 pct, US oil hits $100/bbl on Libya unrest
* Risk aversion knocks stocks, lifts bonds and Swiss franc
* No cause for concern over silver supply, GFMS says
(Recasts, adds comments, updates prices, new byline,
dateline, previously LONDON)
By Frank Tang
NEW YORK, Feb 23 (Reuters) - Gold rose to its highest in
more than seven weeks on Wednesday, closing in on record highs
as escalating unrest in Libya and soaring crude oil prices
fueled fears of inflation and a stalled global economic
recovery.
Wall Street fell sharply for a second day as investors
sought safety in bonds, gold and the Swiss franc due to worries
that turmoil will spread to other countries in North Africa and
the Middle East. []
Spot gold <XAU=> rose 1.1 percent to $1,414.15 an ounce by
12:40 p.m. EST (1740 GMT). U.S. gold futures for April delivery
<GCJ1> gained $13.2 to $1,414.3 an ounce.
"This move in gold right now is acutely about the Middle
East. The trade is about fear but people are viewing it as an
extension of the inflation trade," said James Dailey, portfolio
manager of the TEAM Asset Strategy Fund. <TEAMX.O>
U.S. crude oil futures <CLc1> marched rapidly to hit $100 a
barrel on possible supply disruption from Libya, stoking
inflation concern. []
Thousands of Libyans celebrated the liberation of the
eastern city of Benghazi from the rule of Muammar Gaddafi on
Wednesday, who was reported to have sent a plane to bomb them
as he clung to power. []
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
See interactive factbox on Middle East unrest:
http://link.reuters.com/puk87r
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A day earlier, gold ended lower as investors took profits
after bullion briefly rose above $1,410 an ounce.
Gold gained 2.4 percent last week on heightened
geopolitical tensions and renewed concern about a European
sovereign debt crisis.
"It is dominated by the Middle East fears and the weaker
dollar," Standard Bank analyst Walter de Wet said of the
market.
"We think we could easily test the highs again for gold,"
he added.
Earlier in the session, the gold market took heart as the
dollar weakened after after U.S. existing home sales data. The
data showed a rise in home sales but a fall in house prices.
RISK AVERSION SPREADS
The broader markets showed widespread risk aversion. Stock
markets retreated globally, while prices of industrial metals
led by copper, though concerns over output from oil-rich Libya
boosted crude prices. [] [] []
Meanwhile, safe havens like German government bonds and the
Swiss franc rose, with the Swissie at its highest point versus
the dollar so far this year. [] [] []
But while dealers reported strong demand for investment
products like gold bars, interest in bullion-backed exchange
traded funds softened.
The world's largest gold-backed ETF, the SPDR Gold Trust
<GLD>, said holdings dropped to 1,218.243 tonnes on Tuesday
from 1,223.098 tonnes a day before. []
Holdings in the world's largest silver ETF, the iShares
Silver Trust <SLV>, fell to 10,342.89 tonnes on Tuesday from
10,519.05 tonnes the previous day. []
Silver <XAG=> rose 1.2 percent to $33.46 an ounce. The
metal has risen strongly this month on worries about tightness
in the market, but metals consultancy GFMS said on Wednesday
there was no need for concern about supply.
"We are expecting a reasonably robust increase (in new mine
output) this year," Paul Walker, GFMS's chief executive
officer, told Reuters in an interview. "The rise in mine output
should keep silver still in a surplus." []
Platinum <XPT=> dropped 1.1 percent to $1,769.24 an ounce,
while palladium <XPD=> lost 4.2 percent at $769.22.
Prices at 12:51 p.m. EST (1751 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCJ1> 1415.60 14.50 1.0% -0.4%
US silver <SIH1> 33.505 0.643 2.0% 8.3%
US platinum <PLJ1> 1775.80 -10.50 -0.6% -0.1%
US palladium <PAH1> 771.50 -34.20 -4.2% -4.0%
Gold <XAU=> 1414.92 15.72 1.1% -0.3%
Silver <XAG=> 33.51 0.47 1.4% 8.6%
Platinum <XPT=> 1768.28 -20.22 -1.0% 0.2%
Palladium <XPD=> 767.93 -34.30 -4.3% -3.9%
Gold Fix <XAUFIX=> 1409.25 8.00 0.6% -0.1%
Silver Fix <XAGFIX=> 33.29 40.00 1.2% 8.7%
Platinum Fix <XPTFIX=> 1794.00 10.00 0.6% 3.6%
Palladium Fix <XPDFIX=> 809.00 5.00 0.6% 2.3%
(Additional reporting by Jan Harvey and Rebekah Curtis in
London; Editing by Marguerita Choy)
