* Gold at highest since March 7, silver at 31-year peak
* New U.S. single-family home sales hit record low
* Libya air strike, political unrest in Arab world support
* Coming up: U.S. durable goods Thursday
(Rewrites, updates market activity, adds comments, changes
dateline, previously NEW YORK/LONDON)
By Frank Tang
NEW YORK, March 23 (Reuters) - Gold rose to within a
whisker of its all-time high on Wednesday, as record low U.S.
new home sales stirred talk of extended central banks'
accommodative policies, and a possible collapse of Portugal's
government rekindled euro zone debt worries.
Bullion rose 0.6 percent to just short of its record
$1,444.40 an ounce set on March 7, rebounding over 4 percent in
the last eight sessions amid safe-haven buying and ongoing
Western air strikes on Libya.
Political unrest in other Arab countries also underpinned
gold as Yemen's president offered to step down by year end to
appease mounting demands for his resignation.
Spot gold <XAU=> rose 0.6 percent to $1,437.55 an ounce by
2:29 p.m. EDT (1829 GMT).
Gold accelerated gains to hit a session high of $1,440.90,
its highest since March 7, after data showed the U.S. housing
market slide was deepening as new home prices fell to their
weakest since 2003. []
U.S. April futures <GCJ1> settled up 0.7 percent at $1,438
an ounce.
"The new home sales data inspired some to think that we may
not see the demise of QE2, and we are going to see money
printing continue past its potential expiration at the end of
June," said Mark Luschini, chief investment strategist of
broker-dealer Janney Montgomery Scott with $53 billion assets
under management.
The Federal Reserve's improved view of the U.S. recovery
and heightened vigilance on inflation had suggested it will
wrap up its monetary easing once it completes its $600 billion
bond buying program -- dubbed QE2 because it is the second
round of quantitative easing -- at mid-year.
"That would likely mean more stimuli and more prospect for
inflation, and that's gold friendly," Luschini said.
While commodity markets were mostly quiet on Wednesday,
gold was one of the most actively trading markets with volume
approaching 140,000 contracts at midday.
Spot silver <XAG=> soared to a 31-year peak of $37 an
ounce, surpassing its previous high set two weeks ago. It later
gained 2.3 percent to $37.17 an ounce.
Year to date, silver has gained over 20 percent, and gold
was up just over 1 percent. Silver was boosted by near-term
supply tightness and strong industrial demand on expectations
the global economy continued to recover.
(Graphic: http://link.reuters.com/pat68r)
FED POLICY IN FOCUS
A senior official at the U.S. Federal Reserve said the Fed
must be "extremely wary" not to let price pressures take hold
in the U.S. as they seem to be doing in parts of Europe.
Dallas Fed President Richard Fisher's comments highlight
divisions at the U.S. central bank as it nears the end of its
bond-buying plan, meant to counter both persistently high
unemployment and uncomfortably low inflation. The purchases
began in November and are slated to run through June.
[]
The latest flurry of gold purchases was also bolstered by
the expectation Portugal's parliament would reject the
government's latest austerity measures, and that rekindled euro
zone debt worries ahead of a summit of the economic bloc.
[]
Both platinum and palladium, mainly used as autocatalysts
in vehicles, have come under pressure since Japan's March 11
earthquake and tsunami shut car factories in Japan.
Toyota Motor Co <7203.T> said on Wednesday it would delay
the launch in Japan of two new additions to the Prius line-up,
while Honda Motor Co <7267.T> on Tuesday suspended production
in Japan at least until March 27. []
Platinum <XPT=> climbed 1.1 percent to $1,751.49 an ounce
and palladium <XPD=> gained 1.5 percent to $743.97.
Prices at 2:29 p.m. EDT (1829 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCJ1> 1438.00 10.40 0.7% 1.2%
US silver <SIK1> 37.198 0.929 0.0% 20.2%
US platinum <PLJ1> 1760.00 20.60 1.2% -1.0%
US palladium <PAM1> 749.30 11.45 1.6% -6.7%
Gold <XAU=> 1437.55 8.05 0.6% 1.3%
Silver <XAG=> 37.17 0.83 2.3% 20.4%
Platinum <XPT=> 1751.49 19.49 1.1% -0.9%
Palladium <XPD=> 743.97 10.97 1.5% -6.9%
Gold Fix <XAUFIX=> 1439.50 6.50 0.5% 2.1%
Silver Fix <XAGFIX=> 36.58 63.00 1.8% 19.4%
Platinum Fix <XPTFIX=> 1744.00 3.00 0.2% 0.8%
Palladium Fix <XPDFIX=> 739.00 3.00 0.4% -6.6%
(Additional reporting by Pratima Desai and Rebekah Curtis in
London; Editing by Marguerita Choy)
