* 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 prices, adds comment)
By Jan Harvey
LONDON, April 4 (Reuters) - Gold rose back above $1,430 an
ounce 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. currency.
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 $1,434.60 an ounce at 1321 GMT,
against $1,427.98 late in New York on Friday. U.S. gold futures
for April delivery <GCJ1> rose $7.30 an ounce to $1,435.40.
Gold is also benefiting from concerns some smaller euro zone
economies such as Portugal and Ireland will continue to struggle
with sovereign debt, especially if the ECB presses ahead with a
rate hike, and from unrest in the Middle East and North Africa.
"There are all sorts of drivers supporting gold at the
moment," said David Wilson, an analyst at Societe Generale.
"There are some risk-supporting issues -- the debt situation,
the continuing Middle East situation."
The euro meanwhile hit a 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. []
This is helping the single currency shrug off concerns over
sovereign risk. 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 $38.58 an ounce, lifted by gold's gains
and expectations the economic recovery would benefit industrial
commodities. It was later at $38.47 an ounce against $37.74.
Among other precious metals, platinum <XPT=> was at
$1,778.74 an ounce against $1,765, while palladium <XPD=> was at
$781.97 against $769.95.
(Reporting by Jan Harvey; editing by Alison Birrane and
Keiron Henderson)
