* Investors watch Saudi Arabia
* Gold market remains tight, scrap sales seen
* Coming up: U.S. Feb retail sales due at 1330 GMT
(Adds comment/detail, updates prices)
By Pratima Desai
LONDON, March 11 (Reuters) - Gold slipped alongside oil on
Friday but was supported after a major earthquake struck Japan
and investors fretted about unrest in the Middle East.
The precious metal is on track for its biggest weekly
decline since early January, down about $30 since hitting a
lifetime high of $1,444.40 a troy ounce on Monday.
Spot gold <XAU=> was bid at $1,407.80 an ounce at 1145 GMT
from $1,412.59 at the close on Thursday.
Investors protect their portfolios by buying gold when they
expect rising price pressures, often fuelled by energy costs.
However, U.S. crude futures <CLc1> fell back below $100 a
barrel, helping to ease fears of higher inflation, down about $4
from session highs. []
The biggest earthquake to hit Japan since records began 140
years ago struck the northeast coast, triggering a 10-metre
tsunami that swept away everything in its path, including
houses, ships, cars and farm buildings. []
"Gold is trading off oil, but Japan's earthquake and tension
in the Middle East is helping," said Andrey Kryuchenkov, an
analyst at VTB Capital. "Markets are nervous also with a planned
'day of rage' in Saudi Arabia."
Investors are watching to see what happens in Saudi Arabia,
where a planned day of demonstrations will test whether
activists calling for political reform will succeed in taking
their protests to the streets. [] []
Also on the radar was Libya, where a sea and tank assault
was launched on the oil port of Ras Lanuf overnight,
intensifying a counter-offensive against the out-gunned
insurgents. []
"Historically, those sort of events in the Middle East have
tended to be quite supportive," said Michael Lewis, head of
commodity research at Deutsche Bank.
"But the effect will probably fade quite quickly."
TAINTED
A generally stronger dollar <.DXY> also weighed on gold. The
yen <JPY=> fell broadly and slumped to a two-week low against
the dollar. A higher U.S. currency makes dollar-denominated
commodities cheaper for holders of other currencies. [].
"There have been signs of some profit taking and scrap
sales, but the market remains tight. Focus is concentrated on
the Middle East; any sign of resolution will take some froth off
the gold market," Standard Bank said in a note.
"Private investors have bought (silver) as a more affordable
gold substitute, while professionals have remained keenly aware
of silver's propensity to outperform in a bull market."
Silver <XAG=> was bid at $34.27 an ounce from $35.25 on
Thursday, having rallied to a 31-year peak above $36 on Monday.
Holdings of iShares Silver Trust <SLV> were unchanged at a
record high at 10,974.06 tonnes.
"While clients we visited in the US and Canada over the past
two weeks mostly wanted to talk about gold, we noted a clear
upward shift in their interest in silver," UBS said in a note.
"There is little doubt that gold has lost some of its
previous supporters to silver. Of those clients able to invest
in the metal itself, rather than being restricted to silver
equities, close to half were extremely bullish on silver's
prospects."
Spot platinum <XPT=> was at $1,762.24 an ounce from
$1,760.24 on Thursday and palladium <XPD=> at $746.50 an ounce
from $765.50 an ounce.
"The appeal of (platinum and palladium) has been tainted by
people worrying about the rise in oil prices and the impact on
economic growth," a trader said.
(Editing by Jane Baird and Alison Birrane)
