* Libya's Gaddafi agrees to Chavez's peace plan - report
* Spot gold targeting $1,450 - technicals
* Coming up: ECB rate decision; 1245 GMT
(Adds details; updates prices)
By Rujun Shen
SINGAPORE, March 3 (Reuters) - Gold fell more than half a
percent on Thursday, backing away from the previous session's
record high above $1,440 an ounce, on a peace plan for Libya
proposed by OPEC-member Venezuela to end violent unrest in the
country.
Arab League Secretary General Amr Moussa said on Thursday
that the a plan to bring peace to proposed by Venezuelan leader
Hugo Chavez was "under consideration."
News network Al Jazeera said earlier the plan involved a
commission from Latin America, Europe and the Middle East trying
to reach a negotiated outcome between Libyan leader Muammar
Gaddafi and rebel forces for this North African oil-producing
country.
"If some sort of resolution is achieved for Libya, it will
certainly affect gold -- investors will take profit and adjust
their long positions," said Ong Yi Ling, an analyst at Phillip
Futures.
Investors had not expected a prompt resolution to the Libya
crisis, and bet on further rise in gold.
Spot gold fell as much as 0.7 percent and more than
$11 from an intraday high of $1,436.15 at heel of the news. It
was trading at $1,425.76 an ounce by 0802 GMT, down 0.6 percent.
Prices dropped as low as $1,422.35, flirting with support at
$1,420.
U.S. gold futures lost 0.8 percent at $1,426.80.
Brent crude dropped more than $3 on the news to an
intra-day low of $113.09 a barrel, before recovering to near
$115 by 0700 GMT.
Investors are also watching an ECB policy meeting later on
Thursday, where the central bank is expected to step up
anti-inflation rhetoric and may phase out some of its crisis
support measures.
However, most economists do not expect rate hikes to
materialise until at least October.
"Should the ECB reinforce the expectations that it will
raise interest rates sooner or later, it could take some wind
off gold's rally," said Ong.
Gold's appeal could diminish in the short term if central
banks start raising interest rates, which would ease some
inflationary concerns. Higher interest rates would raise
increase the opportunity cost of holding gold.
However, over a longer period of time, high levels of
inflation, high interest rates and high gold prices tend to
coincide.
China, which has raised interest rates twice in the past six
months and increased bank reserve requirement ratios eight times
since the start of 2010, will probably raise them again this
month, as the world's second-largest economy battles stubborn
inflation.
In the latest data from the United States, U.S. private
sector employers added more jobs than expected last month, while
the Federal Reserve said economic activity slowly improved in
the beginning of the year.
Spot silver rose to just 2 cents below the 31-year
high of $34.96 an ounce hit on Wednesday, before dropping more
than 50 cents to $34.40.
Spot platinum fell 0.6 percent at $1,835.49, snapping
a four-day winning streak.
Precious metals prices 0802 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1425.76 -8.73 -0.61 0.44
Spot Silver 34.40 -0.27 -0.78 11.47
Spot Platinum 1835.49 -10.25 -0.56 3.85
Spot Palladium 816.22 -0.50 -0.06 2.09
TOCOM Gold 3765.00 0.00 +0.00 0.97 769
TOCOM Platinum 4899.00 12.00 +0.25 4.32 187
TOCOM Silver 90.30 0.00 +0.00 11.48 26
TOCOM Palladium 2160.00 1.00 +0.05 3.00 5
COMEX GOLD APR1 1426.80 -10.90 -0.76 0.38 23129
COMEX SILVER MAY1 34.41 -0.43 -1.23 11.20 6840
Euro/Dollar 1.3867
Dollar/Yen 81.87
TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months
(Editing by Ed Lane)
Reuters
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