* Clashes seen in Libya between protesters, Gaddafi forces
* Oil prices retreat as OPEC mulls production increase
* Main gold ETF sees inflow for first time since Feb. 1
(Updates with comment, refreshes prices)
By Amanda Cooper and Jan Harvey
LONDON, March 8 (Reuters) - Gold eased below $1,430 an ounce
on Tuesday, falling further away from the previous day's record
high after crude oil prices slid, thereby alleviating some of
the concern about a potential oil shock to the global economy.
Gold has risen 8.5 percent in the last six weeks, as clashes
in Libya and turbulence across the Arab world have encouraged
investors to seek a safe-haven in which to put their capital.
Yet the 18-percent rise in the oil price in this time has
raised investor expectations for inflation at a time when
central banks around the world prepare to withdraw the
ultra-loose monetary policies in place since the financial
crisis, which would ultimately be detrimental to gold.
Spot gold <XAU=> was bid at $1,427.50 an ounce at 1511 GMT,
against $1,430.74 late in New York on Monday. U.S. gold futures
for April delivery <GCJ1> eased $6.60 to $1,428.20.
Gold fixed at $1,426.25 an ounce versus $1,435.00.
"Gold is now weighing its options between the continued
flight to safety on the one hand and on the other hand, the
likely rate increase in Europe as well," said Barclays Capital
analyst Suki Cooper.
"At the moment, it is balanced between the two, but I think
if we see a heightening of geopolitical tensions, we could see
gold extend its gains," she said, adding her average forecast
for the gold price in the first quarter was $1,390 and $1,490
for the second quarter of the year.
Gold hit a record $1,444.40 an ounce and oil rallied on
Monday after troops loyal to Libyan leader Muammar Gaddafi
launched a counter-offensive against rebels protesting against
his 41-year rule, fuelling fears Libya was facing civil war.
Both oil and gold later retreated, however. Oil prices can
be seen as a leading indicator of risk perceptions in the
oil-rich Middle East and North Africa region, so falling prices
tend to suggest less need to hold gold as a haven from risk.
As gold is often traded as part of a commodities basket
which also includes oil, both tend to move in line and the
correlation between the two reached its strongest in a month.
"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.
Oil prices fell sharply on Tuesday with Brent crude dropping
more than $2 a barrel after Kuwait's oil minister said OPEC was
considering boosting production for the first time in more than
two years. []
VIOLENCE RAGES IN LIBYA
On the international front, Britain and France led a drive
at the United Nations for a no-fly zone over Libya, a move that
would prevent Gaddafi from unleashing air raids on rebel
fighters and towns or from flying in reinforcements.
Adding to the pressure on gold was a rise in the dollar
against the euro, which fell as investors debated what the
outlook for higher euro zone interest rates might mean for the
region's more indebted nations. []
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 fell 0.3 percent to $35.75 an ounce, while
platinum <XPT=> was down 0.8 percent at $1,802.70 an ounce
against $1,816.49, while palladium <XPD=> was down 0.4 percent
at $782.72.
(Editing by James Jukwey)
