* Gold up on safe-haven bid as Libya ceasefire questioned
* Investors nervous about violence in Bahrain, Syria
* Goldman expects gold to hit record $1,480 in 3 months
* Coming up: U.S. existing home sales on Monday
(Updates prices, adds comment, detail)
By Frank Tang
NEW YORK, March 18 (Reuters) - Gold rose for a third
straight day on Friday after a unilateral ceasefire declared by
Libyan leader Muammar Gaddafi failed to calm investor nerves as
political tensions remained elevated across the Arab world.
Bullion also benefited from a weaker dollar as traders
braced for more official action after the G7 countries
coordinated to intervene on the yen, and as fresh political
unrest was reported in Yemen, Syria and Bahrain.
"It's the concern about what would happen in Libya. Will
Gaddafi really stick up to the ceasefire? That's probably the
only reason why gold's being bid up at all," said Dennis
Gartman, author of the Gartman Letter, an investment
newsletter.
Recently weaker volume suggested, however, gold could lack
the conviction to rise further, and Friday's gains were largely
driven by the drop in the dollar, Gartman said.
Spot gold <XAU=> rose 1.1 percent to $1,418.10 an ounce by
2:58 p.m. EDT (1858 GMT). The U.S. April contract <GCJ1>
settled up $11.9 at $1,416.10.
Total COMEX trade was about 15 percent lower than its
30-day average. Lower-than-usual turnover during gold's gains
prompted some traders to doubt the metal had momentum to rise
further.
In Asian trade, the market largely ignored news that
China's central bank raised lenders' required reserves by 50
basis points, a move viewed by some as a confirmation of gold's
inflation-hedge appeal. []
The metal ended the week flat after dropping 1 percent last
week, as Japan's earthquake, tsunami and nuclear crisis sent
some investors to the sidelines with global equity and
commodity markets still reeling from heavy losses.
"People are anxious about the commodities complex at the
moment. With what happened in Japan coupled with concerns of
high oil prices, investors are worried that the economy and
demand for commodities would suffer," said Mark Luschini, chief
investment strategist at Janney Montgomery Scott.
Noncommercial net long positions, or bullish bets, fell
about 9 percent in the week to March 15 as prices weakened,
according to the Commitments of Traders report by the U.S.
Commodity Futures Trading Commission. []
Spot silver <XAG=> rose 2.5 percent to $35.02 an ounce,
with volume about one-third lower than its 30-day norm.
PUT-CALL SKEW NARROWS
On the options front, put buying was favored over calls, as
investors combined a strategy to buy puts and sell calls to
protect against downside risk. The implied volatility gap
between puts and calls, however, has narrowed.
(Graphic on put-call skew: http://r.reuters.com/rud68r )
"With everything going on in Libya and Japan, nobody wants
to go home short on Fridays," COMEX gold options floor trader
Dominick Cognata said.
"The gold market has been very news-sensitive. As soon as
any bit of new information comes out, we have a spike one way
or another."
Gold is underpinned by renewed economic worries as Japan's
battle against its nuclear emergency has shaken confidence in
global financial markets this week. []
Violence in North Africa and the Middle East also boosted
gold. In Libya, western warplanes prepared to attack Gaddafi's
forces, while political unrest lingered in Bahrain, and
protesters were killed in Syria and Yemen.
Currency fluctuations benefited gold, as the dollar fell
broadly but rose 3 percent against the yen after the Group of
Seven launched its first coordinated intervention in currency
markets since 2000. []
Market sentiment improved after U.S. investment bank
Goldman Sachs Group Inc <GS.N> forecast gold rallying to a
record $1,480 an ounce in three months on declining U.S. real
interest rates. []
Platinum rebounded after the market fretted about a loss of
demand due to car plant closures in Japan earlier this week.
Major automakers, led by world No. 1 Toyota Motor Corp
<7203.T>, remain shut and may stay that way for some time as
they struggle to restart production amid a shortage of parts
and workers.
Platinum <XPT=> gained 1.1 percent to $1,716.49 an ounce
and palladium <XPD=> climbed 3.3 percent to $727.97 an ounce.
Prices at 2:58 p.m. EST (1858 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCJ1> 1416.10 11.90 0.8% -0.4%
US silver <SIK1> 35.058 0.800 0.0% 13.3%
US platinum <PLJ1> 1723.40 16.50 1.0% -3.1%
US palladium <PAM1> 731.20 14.40 2.0% -9.0%
Gold <XAU=> 1418.10 15.70 1.1% -0.1%
Silver <XAG=> 35.02 0.84 2.5% 13.5%
Platinum <XPT=> 1716.49 19.00 1.1% -2.9%
Palladium <XPD=> 727.97 23.47 3.3% -8.9%
Gold Fix <XAUFIX=> 1420.00 4.50 0.3% 0.7%
Silver Fix <XAGFIX=> 35.15 68.00 2.0% 14.8%
Platinum Fix <XPTFIX=> 1720.00 1.00 0.1% -0.6%
Palladium Fix <XPDFIX=> 727.00 5.00 0.7% -8.1%
(Additional reporting by Rebekah Curtis in London; Editing by
Dale Hudson)
