* Gold underpinned by safe-haven demand, political tension
* Silver hits six-week high on strong industrial demand
* Investors eye Chinese inflation data due Tuesday
(Recasts, updates prices at close; new byline, changes
dateline, previously LONDON)
By Frank Tang
NEW YORK, Feb 14 (Reuters) - Gold rose above $1,360 an
ounce on Monday on fears that Egypt's unrest could spread
across the Arab world, while silver gained 2 percent on strong
industrial demand driven by signs of an improving economy.
Bullion extended gains after notching its second
consecutive weekly gain, and as trade data showed U.S. futures
investors' bullish position rose last week for the first time
this year.
"There was a lot of commodities and metals buying this
morning. Both silver and palladium, which have stronger
fundamentals, are way ahead in the pack among the precious
metals," said Miguel Perez-Santalla, vice president of Heraeus
Precious Metals Management.
"As for silver, it was primarily driven by industrial
demand on expectations of strong consumption," he said.
The tightest physical silver supplies in four years has
tipped the U.S. silver futures market into backwardation since
last week, making near-term prices more expensive than more
distant months. []
Spot gold <XAU=> rose 0.4 percent to $1,360.85 an ounce by
2:45 p.m. EST (1945 GMT).
U.S. gold futures for April delivery <GCJ1> settled up
$4.70 at $1,365.10 an ounce, with volume more than 50 percent
below its 30-day average, in line with lower turnover last
week. Some traders said dwindling volume could signal waning
investor interest in gold.
Silver <XAG=> gained 2.2 percent to $30.51 an ounce, having
earlier hit a near six-week high at $30.71, with turnover about
10 percent lower than its 30-day average.
The gold-silver ratio -- the number of silver ounces needed
to buy an ounce of gold -- fell to near a five-year low, as
silver has recently outperformed bullion.
Confidence in the longer-term strength of gold prices was
demonstrated last week by a report showing investors were
beginning to build up their exposure to U.S. gold futures.
The net non-commercial, or spec, long position in COMEX
gold futures posted its first weekly rise since early January
and the largest weekly rise since early April 2010, the
Commodity Futures Trading Commission said in its weekly
Commitments of Traders report.
(Graphic: http://link.reuters.com/jem97r)
U.S. silver spec longs rose for a second straight week.
(Graphic: http://link.reuters.com/kem97r)
FALLOUT AFTER EGYPT
Gold also benefited from safe-haven demand amid fears that
political unrest will escalate in the Arab world after Hosni
Mubarak's resignation after nearly three weeks of protests.
Police in Bahrain fired teargas and rubber bullets to break
up pro-reform demonstrations stimulated by popular upheaval in
Egypt and Tunisia. One protester was killed, witnesses said.
Meanwhile, Tunisia has deployed soldiers to stop a tide of
illegal immigrants trying to reach Italy. Protests in the North
African country ousted its president a month ago.
Traders also said that comments from European Central Bank
Governing Council member Ewald Nowotny also boosted gold's
inflation hedge appeal.
The European Central Bank is "vehemently not" turning soft
on inflation but neither will it rush to tackle short-term
price pressures, Nowotny said. []
Traders awaited a raft of data, including Chinese inflation
numbers and a euro zone growth report due on Tuesday, to give
fresh direction to the market.
"China's CPI reading for January will be released tomorrow
and market chatter currently suggests it will be lower than
expected," said UBS. "Should CPI disappoint, this could act as
a catalyst for gold to trend lower in the short term."
Platinum <XPT=> rose 1.3 percent to $1,824.99 an ounce,
while palladium <XPD=> jumped 2.3 percent to $829.97.
Prices at 3:13 p.m. EST (2013 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCJ1> 1365.10 4.70 0.3% -4.0%
US silver <SIH1> 30.534 0.539 0.0% -1.3%
US platinum <PLJ1> 1827.60 14.10 0.8% 2.8%
US palladium <PAH1> 832.80 18.10 2.2% 3.7%
Gold <XAU=> 1362.05 5.93 0.4% -4.1%
Silver <XAG=> 30.57 0.72 2.4% -0.9%
Platinum <XPT=> 1824.99 22.49 1.2% 3.3%
Palladium <XPD=> 829.97 18.97 2.3% 3.8%
Gold Fix <XAUFIX=> 1365.00 8.25 0.6% -3.2%
Silver Fix <XAGFIX=> 30.16 16.00 0.5% -1.5%
Platinum Fix <XPTFIX=> 1830.00 6.00 0.3% 5.7%
Palladium Fix <XPDFIX=> 824.00 0.00 0.0% 4.2%
(Additional reporting by Jan Harvey in London; Editing by
Walter Bagley)
