* Gold rises 2.5 percent on safe-haven play, Egypt unrest
* Bullion set for biggest one-day gain in nearly 3 months
* Dollar, US Treasuries, crude oil rally, stocks down
(Recasts, updates prices, market activity; new byline,
dateline, previously LONDON)
By Frank Tang
NEW YORK, Jan 28 (Reuters) - Gold surged 2.5 percent on
Friday, bouncing $40 per ounce off session lows as fears that
unrest in Egypt will spread across the Middle East prompted
investors to buy the precious metal as a safe haven.
Egypt's president Hosni Mubarak imposed a curfew and
ordered troops to back up police as they struggled to control
crowds who flooded the streets of Cairo and other Egyptian
cities on Friday to demand that he step down. []
"All things Egypt. There is a major flight to quality...a
stronger dollar, and flight into bonds, flight into gold," said
Frank McGhee, head precious metals trader of Integrated
Brokerage Services in Chicago.
"Gold is benefiting more than bonds at this particular
point. People are looking at gold as a safe haven in times like
this, and it's certainly showing it," he said.
Investors often turn to gold as an insurance at the expense
of paper currencies during times of political and economic
uncertainties.
Spot gold <XAU=> rose 2.3 percent to $1,343.01 an ounce by
11:58 p.m. EST (1658 GMT), the largest one-day gain in nearly 3
months. U.S. gold futures for February delivery <GCG1> rose
$24.7 to $1,343.10 an ounce.
The metal had touched a four-month low of $1,308.00 an
ounce, having fallen 2.6 percent on Thursday on a run of firmer
than expected U.S. economic data which boosted confidence in
the recovery.
Gold initially weakened after data showed the U.S. economy
gathered speed in the fourth quarter with the biggest gain in
consumer spending in more than four years. []
"Though the GDP data came in slightly below expectations...
(its acceleration) was driven by two factors which are very
important when looking forward, and that is the more important
factor in assessing the future course of the U.S. economy,"
said Quantitative Commodity Research consultant Peter Fertig.
The dollar and U.S. Treasuries rose on as Egypt's protests
drove investors to seek safer assets. Stocks fell around the
world and crude oil prices rose.
"The market is a little sensitive when people take to the
streets as it reminds them of the riots in Greece a year ago,
and that did lead to a flight into the safety of U.S.
Treasuries," said Chris Rupkey, chief financial economist at
Bank of Tokyo/Mitsubishi UFJ in New York.
ETF INVESTMENT EASES
Investment demand for gold has been soft this year, with
holdings of the SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, down another 3 tonnes on
Thursday.
London's ETF Securities reported a 1.3-tonne outflow from
its gold exchange-traded products on the same day.
The Wall Street Journal said on Friday hedge fund SHK Asset
Management liquidated a U.S. gold futures position this week
valued at over $850 million, more than 10 percent of the main
U.S. futures market. []
Spot silver <XAG=> rose 3.9 percent to $27.92 an ounce.
Holdings of the world's largest silver-backed ETF, the iShares
Silver Trust <SLV>, fell to 10,426.43 tonnes on Thursday from
10,447.70 tonnes.
Platinum <XPT=> climbed 1.1 percent to $1,800.99 an ounce
and palladium <XPD=> gained 1.5 percent to $814.47.
Prices at 12:05 p.m. EST (1705 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCG1> 1345.10 26.70 2.0% -5.4%
US silver <SIH1> 27.915 0.884 3.3% -9.8%
US platinum <PLJ1> 1808.00 4.50 0.3% 1.7%
US palladium <PAH1> 818.00 4.50 0.6% 1.8%
Gold <XAU=> 1346.31 34.07 2.5% -5.2%
Silver <XAG=> 27.95 1.07 4.0% -9.4%
Platinum <XPT=> 1803.00 22.00 1.2% 2.0%
Palladium <XPD=> 814.72 12.25 1.5% 1.9%
Gold Fix <XAUFIX=> 1319.00 3.00 0.2% -6.5%
Silver Fix <XAGFIX=> 26.68 -71.00 -2.6% -12.9%
Platinum Fix <XPTFIX=> 1784.00 6.00 0.3% 3.1%
Palladium Fix <XPDFIX=> 806.00 3.00 0.4% 1.9%
(Additional reporting by Al Yoon in New York and Jan Harvey in
London; Editing by David Gregorio)
