* Gold hits 7-week high, US oil hits $100 on Libya unrest
* Risk aversion knocks stocks, lifts bonds and Swiss franc
* No cause for concern over silver supply, GFMS says
* Coming up: U.S. durable goods, new home sales Thursday
(Recasts, adds graphic, updates prices to market close)
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 slower economic growth.
Wall Street fell sharply for a second day as investors
sought safety in bonds, gold and the Swiss franc as thousands
of Libyans celebrated the liberation of the eastern city of
Benghazi from the rule of Muammar Gaddafi, who was reported to
have sent a plane to bomb them as he clung to power.
[]. []
Spot gold <XAU=> rose 0.7 percent to $1,408.80 an ounce by
3:19 p.m. EST (2019 GMT), after earlier hitting $1,416.30, its
highest since Jan. 4. Bullion hit its lifetime high of around
$1,430 on Dec. 7.
"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. They later settled up nearly $3 at about $98
a barrel, its highest since October 2008. []
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
See interactive factbox on Middle East unrest:
http://link.reuters.com/puk87r
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U.S. gold futures for April delivery <GCJ1> settled up
$12.90 at $1,414.00 an ounce, with volume totaled about 30
percent lower than the 30-day average, in line with
lower-than-usual recent turnover.
On Tuesday, gold was sold off along with grains and
industrial metals as the biggest decline on Wall Street since
August triggered margin selling.
Open interest, a gauge of market liquidity, climbed 3
percent to above 500,000 lots as of Tuesday for the first time
since Jan. 21.
Gold has gained gained nearly 9 percent since an intraday
low of $1,308 on Jan. 28 on a combination of simmering
geopolitical tensions, expectation of a low interest rate
environment and renewed concern about a European sovereign debt
crisis.
(Graphic: http://link.reuters.com/zev28r)
RISK AVERSION SPREADS
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.
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 $33.45 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' chief executive officer,
told Reuters in an interview. "The rise in mine output should
keep silver still in a surplus." []
Platinum <XPT=> dropped 0.5 percent to $1,780.49 an ounce,
while palladium <XPD=> lost 3.1 percent at $777.50.
Prices at 3:23 p.m. EST (2022 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCJ1> 1414.00 12.90 0.9% -0.5%
US silver <SIH1> 33.298 0.436 0.0% 7.6%
US platinum <PLJ1> 1776.70 -9.60 -0.5% -0.1%
US palladium <PAH1> 774.55 -31.15 -3.9% -3.6%
Gold <XAU=> 1408.91 9.71 0.7% -0.7%
Silver <XAG=> 33.44 0.40 1.2% 8.4%
Platinum <XPT=> 1780.74 -7.76 -0.4% 0.7%
Palladium <XPD=> 777.50 -24.73 -3.1% -2.8%
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)
