* Oil steady, underpinned by Middle East unrest
* Gold may retrace to $1,416 - technicals
* Coming up: U.S. ICSC chain stores; 1145 GMT
(Updates prices)
By Rujun Shen
SINGAPORE, March 22 (Reuters) - Gold prices edged higher on
Tuesday fed by concerns over inflation unleashed by high oil
prices and an increased safe-haven appeal amid growing tensions
in the Middle East following western powers' air strikes on
Libya.
Investors also kept an eye on Japan's progress in averting a
full-blown nuclear disaster, caused by a devastating earthquake
and tsunami on March 11 that drove a surge in physical gold
premiums to three-year highs as buyers in less affected parts of
the nation stretched supplies.
Spot gold edged up 0.2 percent to $1,427.86 an ounce
by 0706 GMT, after reaching $1,434.70 in the previous session,
just $10 off the record high hit on March 7.
U.S. gold gained 0.1 percent to $1,428.20.
"The tension in Libya and the Middle East and North Africa
region is supportive of gold prices. There is little doubt that
gold would test a new high in the near future," said Li Ning, an
analyst at Shanghai CIFCO Futures.
"In the medium to long term, concerns about inflation will
continue to buoy gold."
Li added that inflationary concerns had spread from emerging
economies, including China, to developed economies including
euro zone nations.
A prolonged period of high oil prices could help fan
inflation, and in turn boost demand for gold, seen as a hedge
against inflation.
Brent crude futures were supported near $115 on Tuesday by
supply concerns triggered by the spreading unrest in the Middle
East, while uncertainty about demand from the world's No. 3
consumer Japan capped gains.
Japan appears to be making progress containing its nuclear
crisis as it restored power cables to all six reactors and
started a pump at one of them to cool overheating nuclear fuel
rods. But rising smoke and haze from two of the most threatening
reactors suggested the battle was far from won.
Holdings in the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust , fell a hefty 10.616 tonnes, its
largest one-time fall since late January, suggesting some waning
investor interest in bullion.
The sentiment was echoed by a technical analysis indicating
gold may retrace to $1,416, as the current rally is exhausted,
Reuters market analyst Wang Tao says.
Gold futures on the Tokyo Commodity Exchange edged
up 0.2 percent to 3,725 yen per gram, or $1,426.695 an ounce.
"Gold in yen jumped up this morning, and we've seen some
selling back," said a trader at a Tokyo-based bullion house.
Premium for gold bars in Tokyo were steady at $1.50 to $2
over London spot prices, he added.
Spot silver tracked gold's strength and hit an
intra-day high at $36.33 an ounce, just a hair off a 31-year
high of $36.70 hit in early March. It was trading at $35.92.
Precious metals prices 0706 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1427.86 2.81 +0.20 0.59
Spot Silver 35.92 -0.13 -0.36 16.40
Spot Platinum 1735.45 -6.55 -0.38 -1.81
Spot Palladium 740.03 -4.97 -0.67 -7.44
TOCOM Gold 3725.00 6.00 +0.16 -0.11 50708
TOCOM Platinum 4565.00 38.00 +0.84 -2.79 14373
TOCOM Silver 93.80 2.20 +2.40 15.80 1407
TOCOM Palladium 1947.00 43.00 +2.26 -7.15 331
COMEX GOLD APR1 1428.20 1.80 +0.13 0.48 9531
COMEX SILVER MAY1 35.97 -0.04 -0.10 16.24 4258
Euro/Dollar 1.4234
Dollar/Yen 80.90
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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