* Violence seen in Libya between protesters, Gadaffi forces
* Oil prices retreat as OPEC mulls production increase
* Main gold ETF sees inflow for first time since Feb. 1
(Updates throughout, previous SINGAPORE)
By Jan Harvey
LONDON, March 8 (Reuters) - Gold held near $1,430 an ounce
on Tuesday, supported by violence in North Africa but struggling
to gain traction as a retreat in oil prices prompted some
investors to cash in gains after the last session's record high.
Spot gold <XAU=> was bid at $1,431.75 an ounce at 1009 GMT,
against $1,430.74 late in New York on Monday. U.S. gold futures
for April delivery <GCJ1> fell $2.30 an ounce to $1,432.20.
Prices hit a record $1,444.40 an ounce and oil rallied on
Monday after troops loyal to Libyan leader Muammar Gadaffi
launched a counter-offensive against rebels protesting against
his 41-year rule, fuelling fears Libya was facing civil war.
It later retreated, however.
"Despite the escalation of the unrest in Libya, gold has
been struggling to gain a foothold above the old highs with some
investors seemingly happy to lock in profit at these levels,"
said Saxo Bank analyst Ole Hansen.
"It is still too early to say whether we are treading water
before the next push higher, or if we actually need a
retracement before the buyers feel comfortable enough to take it
up into a new range.
"Given the fact that we have failed to push higher amid the
highest level of uncertainty for the last two years, almost any
setback in crude prices will have an impact on gold, and
silver," he added.
U.S. crude prices fell from the previous day's 2-1/2 year
highs on Tuesday and Brent crude briefly dropped more than $2 to
below $113 as Kuwait's oil minister said OPEC was in talks to
boost output for the first time in more than two years. []
Oil prices have surged in recent weeks after violence broke
out in OPEC member Libya, and as fears grew that unrest in North
Africa and the Middle East could spread throughout the
oil-producing region.
VIOLENCE RAGES IN LIBYA
Britain and France spearheaded a drive at the United Nations
for a no-fly zone over Libya as battles raged across the
country, with Muammar Gaddafi's son saying a civil war would
erupt if his father stepped down. []
The White House resisted rising pressure from some U.S.
lawmakers for direct intervention in Libya, saying it first
wanted to figure out what military options could achieve there.
A pause in the oil rally helped stock markets move higher
after two days of losses in Europe. The euro remained under
pressure versus the dollar after a Moody's downgrade of Greece's
debt ratings on Monday. [] []
"This reminder about sovereign concerns ahead of this
month's meeting of EU ministers to agree a crisis mechanism
structure serves to highlight the problems facing the euro
area," said CMC Markets analyst Michael Hewson.
Concerns over euro zone sovereign debt were a major factor
pushing gold prices higher last year.
Holdings of the world's largest gold-backed exchange-traded
fund, New York's SPDR Gold Trust <GLD>, rose for the first time
since Feb. 1 on Monday, by 6.7 tonnes. []
Meanwhile holdings of the largest silver ETF, the iShares
Silver Trust <SLV>, rose to two-month highs of 10,898.14 tonnes,
climbing 103.25 tonnes, their largest one-day rise since Feb.
23. []
Silver <XAG=> was bid at $36.15 an ounce against $35.85,
having hit a 31-year high at $36.70 an ounce on Monday.
Elsewhere platinum <XPT=> was at $1,811.24 an ounce against
$1,816.49, while palladium <XPD=> was at $786.47 versus $785.97.
(Editing by James Jukwey)
