* Gold, silver retreat from highs; oil down on Gaddafi
* Greece downgrade puts euro zone debt back in focus
* Gold/silver ratio hits 13-year low below 40
* Coming up: U.S. consumer credit data due 2000 GMT Monday
(Adds graphic, updates prices)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, March 7 (Reuters) - Gold retreated from
record highs on Monday as investors took profits after U.S.
crude oil prices sharply pulled back on speculation that Libyan
leader Muammar Gaddafi was seeking a deal to secure a safe exit
from the country.
Silver gained 1.5 percent, having earlier touching a
31-year high on strong physical demand and short-term supply
tightness. Silver's outperforming over bullion sent the
gold-silver ratio below a key psychological level.
"It's a bit of profit-taking right now. The Libya situation
is so fragile at the moment, and there's a lot of speculation
Gaddafi will leave, or whether his forces are retreating," said
Phillip Streible, senior market strategist with MF Global's
Lind Waldock.
Oil prices fell sharply from earlier peaks, with traders
and brokers citing rumors of a deal involving Gaddafi leaving
Libya. The rumors appeared linked to an unsourced report in an
Arabic-language newspaper, trade sources said, but this could
not immediately be verified. []
(Graphic of oil-gold correlation:
http://link.reuters.com/dek48r)
Earlier in the day, Reuters reported that a leading member
of Libya's ruling establishment had appealed to rebel leaders
for dialogue, in the clearest sign yet Gaddafi may be ready to
compromise with opponents challenging his rule. []
Spot gold <XAU=> hit a record $1,444.40 an ounce as
violence flared in Libya and after a downgrade of Greece's
credit rating by Moody's reignited euro zone sovereign debt
worries, which helped fuel a bullion rally last year.
[]
Gold rose 35 cents to $1,432.20 an ounce by 1 p.m. EST
(1800 GMT), while U.S. gold futures for April delivery <GCJ1>
rose $3.80 an ounce to $1,432.60, largely tracking oil's
pullback. Gold prices in London had risen further after U.S.
futures settled on Friday, resulting in a sharper gain in U.S.
prices on Monday as they caught up.
Silver <XAG=> gained 1.2 percent to $36.02 an ounce. The
metal rose to its highest since early 1980 in earlier trade at
$36.70 an ounce.
The gold/silver ratio fell below 40:1 for the first time
since February 1998, the weakest since billionaire Warren
Buffett bought 130 million ounces of silver between 1997 and
1998.
Gold was dragged lower as the increase in the price of oil
weighed on both European and U.S. stocks, and as the euro fell
against the dollar after having earlier hit a four-month high
as expectations of a euro zone interest rate hike next month
faded. []
RISING TENSIONS UNDERPIN
Violence across North Africa and the Middle East has
boosted gold's appeal as a protection from risk in recent
weeks.
"The geopolitical risk premium is clearly reflected in the
gold price," said Robin Bhar, an analyst at Credit Agricole.
"The violence (has) intensified which does prompt suggestions
of civil war in Libya."
Last week, bullion notched its fifth consecutive weekly
gain on fears that Libya's escalating unrest could spread
across the Arab world.
Saudi security forces detained at least 22 minority
Shi'ites who protested last week against discrimination,
activists said on Sunday, as the kingdom tried to keep the wave
of Arab unrest outside its borders. []
Platinum <XPT=> dropped 1.6 percent to $1,811.49 an ounce,
while palladium <XPD=> lost 2.6 percent to $788.47.
Prices at 1 p.m. EST (1800 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCJ1> 1432.60 3.80 0.3% 0.8%
US silver <SIK1> 36.025 0.698 1.9% 16.4%
US platinum <PLJ1> 1824.80 -13.10 -0.7% 2.6%
US palladium <PAM1> 789.45 -20.35 -2.5% -1.7%
Gold <XAU=> 1432.20 0.35 0.0% 0.9%
Silver <XAG=> 36.02 0.41 1.2% 16.7%
Platinum <XPT=> 1818.99 -21.76 -1.2% 2.9%
Palladium <XPD=> 786.72 -22.78 -2.8% -1.6%
Gold Fix <XAUFIX=> 1437.50 0.50 0.0% 1.9%
Silver Fix <XAGFIX=> 36.60 217.00 6.3% 19.5%
Platinum Fix <XPTFIX=> 1838.00 0.00 0.0% 6.2%
Palladium Fix <XPDFIX=> 810.00 4.00 0.5% 2.4%
(Additional reporting by Rebekah Curtis in London; Editing by
Lisa Shumaker)
