* 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
(Recasts, adds details, update prices)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, March 7 (Reuters) - Gold rose on Monday,
retreating from record highs, as crude oil prices sharply
pulled back and the metal's safe-haven appeal eroded amid
speculation that Libyan leader Muammar Gaddafi was seeking a
deal to leave the country.
Silver gained more than 1 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 to a 13-year low under 40.
"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 unit.
Commodities traders and brokers cited 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.
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 0.1 percent to $1,432.90 an ounce by 2:08 p.m.
EST (1908 GMT), while U.S. gold futures for April delivery
<GCJ1> settled up $5.90 an ounce to $1,434.50, 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 percent to $35.96 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. []
GOLD/OIL LINK TIGHTENS
The positive correlation between gold and oil have
tightened of late, as political instability in the Middle East
and North Africa stoke energy supply worries, confirming
bullion's status as an inflation hedge.
(Graphic of oil-gold correlation:
http://link.reuters.com/dek48r)
Since late January, gold has gained 10 percent, while oil
soared more than 25 percent over the same period on concern
that chaos in Libya, an oil exporter, could lead drive up
global energy prices.
"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."
Gold is building on a fifth-consecutive weekly gain last
week, triggered by unrest across the Arab world, which unseated
leaders in Tunisia and Egypt before spreading to Libya,
Bahrain, Yemen, Oman, and most recently the world's largest oil
producer Saudi Arabia.
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 1.5 percent to $1,814 an ounce,
while palladium <XPD=> lost 2.9 percent to $785.79.
Prices at 2:07 p.m. EST (1907 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCJ1> 1434.50 5.90 0.4% 0.9%
US silver <SIK1> 35.865 0.538 0.0% 15.9%
US platinum <PLJ1> 1820.40 -17.50 -1.0% 2.4%
US palladium <PAM1> 790.10 -19.70 -2.4% -1.6%
Gold <XAU=> 1433.30 1.35 0.1% 1.0%
Silver <XAG=> 35.96 0.35 1.0% 16.5%
Platinum <XPT=> 1814.00 -27.00 -1.5% 2.6%
Palladium <XPD=> 785.79 -23.71 -2.9% -1.7%
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)
