* Spreading Middle East unrest spurs safety demand for gold
* Palladium hits 10-yr high, silver at 31-yr peak
* Supply concerns, industrial demand to underpin PGMs
By Chikako Mogi
TOKYO, Feb 21 (Reuters) - Gold rose to a seven-week high on
Monday as spreading unrest in the Middle East underscored its
appeal as a safe-haven asset, while silver and palladium prices
hit historic highs on expectations for growing industrial demand.
Gold added to a weekly gain of nearly 3 percent last week and
was poised for further upside on fresh news from North Africa and
the Middle East, where revolutions which deposed the presidents
of Tunisia and Egypt have inspired protests across the region,
threatening the grip of long-entrenched autocratic leaders.
Spot gold <XAU=> inched up 0.5 percent to $1,396.10 per ounce
as of 0217 GMT, its highest since Jan. 4, and compared with
$1,388.58 an ounce late in New York on Friday.
Bullion has risen for five straight sessions, its longest
winning streak since September. U.S. markets are closed on Monday
for a holiday.
U.S. gold futures for April delivery <GCJ1> also climbed 0.6
percent to $1,396.60 per ounce, compared to Friday's settlement
at $1,388.60.
"With the unrest in the Middle East and North Africa, dealers
couldn't leave for a long weekend with short positions, and this
reflects investor sentiment for flight to safety," said Yuichi
Ikemizu, Tokyo branch manager for Standard Bank, adding that gold
prices were likely to keep inching higher.
Spot gold may rise to its Jan. 3 high of $1,423.57 per ounce
as it has ignored bearish signals and continued to shoot up, says
Wang Tao, a Reuters market analyst for commodities and energy
technicals. []
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The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust <GLD>, said holdings fell to 1,223.098 tonnes by
Feb. 20, its lowest in nine months, from 1,224.008 tonnes on Feb.
15. []
Traders said there was slightly higher demand for gold bars
in the Middle East, mainly due to the unrest.
Expectations for growing industrial demand on an improving
world economy and a rally in the overall precious market also
helped hoist silver to its highest level since 1980, surpassing
the previous 31-year high marked on Friday.
But Ikemizu said there were signs that silver may peak out.
A deepening backwardation -- which means futures are cheaper
than spot prices -- reflects tightness in the market. The
gold/silver ratio -- the number of ounces of silver needed to buy
an ounce of gold -- fell to its lowest in 13 years at under 43 on
Friday as silver prices outperformed, which means silver has
become more expensive relative to gold.
"The silver market may be close to seeing a squeeze," Ikemizu
said.
Spot silver <XAG=> rose to a high of $33.08 an ounce as of
0239 GMT, its highest since 1980.
Holdings in the world's largest silver-backed exchange-traded
fund, iShares Silver Trust <SLV>, rose to 10,519.05 tonnes by
Feb. 18 from 10,438.56 tonnes on Feb. 17. []
Platinum <XPT=> gained 0.7 percent to $1,846 an ounce while
palladium <XPD=> hit a 10-year high of $855.50 in early trade.
Traders said platinum and palladium may see further gains on
a solid demand outlook and supply concerns.
PRICES
Precious metals prices at 0248 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1395.54 6.96 +0. 50 -1.68
Spot Silver 33.01 0.55 +1.69 6.97
Spot Platinum 1843.24 9.74 +0.53 4.29
Spot Palladiu 854.47 6.22 +0.73 6.88
TOCOM Gold 3740.00 24.00 +0.65 0.29 32019
TOCOM Platinum 4981.00 19.00 +0.38 6.07 5904
TOCOM Silver 87.50 3.20 +3.80 8.02 1736
TOCOM Palladium 2298.00 29.00 +1.28 9.59 325
COMEX GOLD APR1 1396.30 7.70 +0.55 -1.77 6766
COMEX SILVER MAR1 33.02 0.72 +2.23 6.71 3083
Euro/Dollar 1.3689
Dollar/Yen 83.08
TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months
(Reporting by Chikako Mogi; Editing by Joseph Radford)
