* Middle East unrest could send gold to test record high
* Gold to retrace to $1,411 before a rise - technicals
* Coming up: U.S. existing home sales, Feb; 1400 GMT
(Adds details, comments; updates prices)
By Rujun Shen
SINGAPORE, March 21 (Reuters) - Gold prices edged higher on
Monday on the escalating tension in the Middle East and North
Africa after western forces launched air attacks in Libya, as a
weaker dollar also lent support.
With unrest spreading in Yemen and Syria, western warplanes
and missiles hit Libya over the weekend in a bid to force leader
Muammar Gaddafi to cease fire on rebels and end attacks on
civilians.
"Obviously the tensions in the Middle East, coupled with the
significantly weak dollar against the euro, help give gold the
current boost," said Darren Heathcote, head of trading at
Investec Australia.
Spot gold gained 0.6 percent to $1,427.91 an ounce by
0244 GMT, extending gains from the previous session.
U.S. gold futures rose by 0.8 percent to $1,428.
Oil prices surged more than $2 as a result of escalating
tensions in Libya, also helping to buoy prices of gold, which is
used as a hedge against inflation.
"If the dollar remains weak and we get further unrest in the
Middle East, there is a very reasonable chance for gold to test
the record high," said Heathcote.
The dollar index declined to its lowest since the end
of 2009, after the euro hit four-month highs against the dollar
as the euro zone looked set to officially agree on details of
bolstering a bailout fund at the March 24-25 summit.
Technical analysis showed that gold may retrace to $1,411
before resuming its uptrend towards the record high at
$1,444.40.
Japan is on a market holiday on Monday, as some progress has
been made in efforts to avert a deadly nuclear crisis at the
quake-damaged Fukushima nuclear plant.
Equities and commodities markets tumbled last week on fears
that Japan's earthquake and tsunami could potentially derail
global growth, but the World Bank said the disaster would
depress growth only briefly before reconstruction kicked off.
Gold premiums in Singapore remained stable at about $1 an
ounce above London spot prices, a Singapore-based dealer.
"Some speculators have been selling today, taking the
opportunity of higher prices, especially as they see some
resistance at the $1,430 level," said the dealer.
Spot silver climbed more than 2 percent at $35.86 an
ounce, leading the precious metals complex.
Precious metals prices 0244 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1427.91 8.34 +0.59 0.60
Spot Silver 35.86 0.81 +2.31 16.20
Spot Platinum 1726.24 8.74 +0.51 -2.33
Spot Palladium 732.25 4.25 +0.58 -8.41
TOCOM Gold 3702.00 -17.00 -0.46 -0.72 24697
TOCOM Platinum 4513.00 -14.00 -0.31 -3.90 3158
TOCOM Silver 90.60 -1.00 -1.09 11.85 226
TOCOM Palladium 1908.00 4.00 +0.21 -9.01 72
COMEX GOLD APR1 1428.00 11.90 +0.84 0.46 8775
COMEX SILVER MAY1 35.90 0.84 +2.39 16.01 5632
Euro/Dollar 1.4175
Dollar/Yen 80.91
TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months
(Editing by Clarence Fernandez)
Reuters
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