* Gold gets lift from dollar drop, oil rally, geopolitics
* Silver outperforms, boosted by industrial demand
* Coming up: U.S. FHFA home price report Tuesday
(Recasts, updates prices, market activity; adds second byline,
dateline, previously LONDON)
By Frank Tang and Amanda Cooper
NEW YORK/LONDON, March 21 (Reuters) - Gold rose for a
fourth day on Monday, buoyed by a weaker dollar, rising oil
prices and investor jitters surrounding air strikes by Western
powers on Libya and Japan's struggle to avert nuclear
disaster.
Gold trimmed initial gains, following oil, but the metal
stayed within a whisker of its record $1,444.40 an ounce set on
March 7. A 1 percent rise in oil prices was still enough to
stoke inflation worries that helped keep gold aloft, analysts
said.
Silver soared nearly 3 percent on strong industrial demand
and near-term supply tightness, after the metal fell 2 percent
last week.
"You can't deny the escalating Middle East problems and the
oil price are all supportive factors, but I wonder whether the
big jump (in the gold price) is more weaker dollar-related,"
said Credit Agricole analyst Robin Bhar.
"It's all contributing to the safe-haven bid, and this week
is going to be important ... geopolitical risk factors are
uppermost in people's minds," Bhar said.
Gold <XAU=> rose 0.6 percent to $1,427.74 an ounce by 12:57
p.m. EDT (1657 GMT), while most-active U.S. April futures
<GCJ1> gained 0.8 percent to $1,427.80.
Spot silver <XAG=> climbed 2.5 percent to $35.93 an ounce,
making it the top gainer in the precious metals complex.
DOLLAR DROPS ON INTEREST RATE VIEW
The dollar fell against a basket of major currencies <.DXY>
to its lowest in 15 months, under pressure from the view that
U.S. interest rates would not rise any time soon compared to
other major economies such as the euro zone. []
Gold appears to have strengthened its traditional negative
correlation to the dollar since the Japanese earthquake struck
ten days ago. Over the longer term, however, gold's link with
the dollar could still be erratic, traders said.
Unsettling investors further was a second wave of
U.N.-authorised air strikes against Libya's Muammar Gaddafi,
which a government spokesman called "barbaric" and Russian
Prime Minister Vladimir Putin said resembled "medieval calls
for crusades." []
"It's happening against a backdrop of elevated uncertainty
from numerous places, which should give these safe-haven type
commodities a bid," said Saxo Bank senior manager Ole Hansen.
Gold will trade in a range between $1,350 and $1,500 an
ounce this year due to favorable currency movements,
geopolitical tensions and loose monetary policies, said Richard
O'Brien, CEO of Newmont Mining Corp <NEM.N>, the world's second
largest gold producer.
"Every time we see political instability, gold becomes a
currency of choice," O'Brien said in an exclusive interview at
the Reuters Global Mining and Steel summit. []
Among platinum group metals, spot platinum <XPT=> gained
1.4 percent to $1,740.75.
Spot palladium <XPD=> also rose 1.4 percent at $738.25 an
ounce, but is set for a near-8 percent decline this quarter,
having come under pressure from investors concerned about the
impact of the Japanese earthquake and soaring energy prices on
the broader economy.
On Tuesday, the market will watch the U.S. Federal Housing
Finance Agency (FHFA) home price index for clues to the health
of the U.S. housing sector, a major part of the national
economy.
Prices at 12:57 p.m. EST (1657 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCJ1> 1428.00 11.90 0.8% 0.5%
US silver <SIK1> 35.950 0.892 2.5% 16.2%
US platinum <PLJ1> 1743.00 19.60 1.1% -2.0%
US palladium <PAM1> 742.20 11.00 1.5% -7.6%
Gold <XAU=> 1427.35 7.78 0.5% 0.6%
Silver <XAG=> 35.93 0.88 2.5% 16.4%
Platinum <XPT=> 1740.75 23.25 1.4% -1.5%
Palladium <XPD=> 738.25 10.25 1.4% -7.7%
Gold Fix <XAUFIX=> 1432.00 4.25 0.3% 1.5%
Silver Fix <XAGFIX=> 36.16 101.00 2.9% 18.1%
Platinum Fix <XPTFIX=> 1741.00 1.00 0.1% 0.6%
Palladium Fix <XPDFIX=> 743.00 2.00 0.3% -6.1%
(Reporting by Frank Tang and Amanda Cooper; Editing by David
Gregorio)
