* Spot gold to fall to $1,390 - technicals
* Coming up: U.s. ISM Manufacturing PMI, Feb; 1500 GMT
(Adds comment; updates prices)
By Rujun Shen
SINGAPORE, March 1 (Reuters) - Spot gold edged up on Tuesday
as escalating unrest in Libya and the Middle East supported
safe-haven demand, though holdings in the biggest gold-backed
exchange-traded fund fell to the lowest level in more than nine
months.
Forces loyal to Libyan leader Muammar Gaddafi were massed
near the Tunisian border on Tuesday, as the United States said
it was moving warships and aircraft closer to Libya, heightening
tension in the volatile region.
Spot gold edged up 0.3 percent at $1,414.66 an ounce
by 0642 GMT, pushing for a third straight day of gains. It had
been moving in a narrow range of just below $6.
The most active U.S. gold futures contract edged down
0.4 percent at $1,415.40.
"There has been some scrap selling and liquidation above
$1,405," said Peter Fung, head of the dealing department at Wing
Fung Precious Metals in Hong Kong.
"We'll probably see a price range between $1,405 and
$1,415."
But even as the political turmoil in the Middle East and
North Africa continued to support safe-haven demand, improved
economic prospects could weigh on gold prices, traders said.
Gold prices could drop 20 percent later this year and in
2012 as the global economy picks up and as speculators exit the
market, the Australian Bureau of Agricultural and Resource
Economics and Sciences (ABARES) said.
Holdings in the SPDR Gold Trust dipped to the lowest
since mid-May last year in a sign that investors may be
switching to stocks and other assets, dealers said.
Spot gold has inched down half a percent so far this year,
compared to a 5.6 percent climb in the Dow Jones Industrial
Average .
On the macroeconomic front, Chinese manufacturing growth
slowed in February to a six-month low, according to an official
survey, as the government's sustained campaign to tame inflation
weighed on industrial activity.
"The market has been waiting to find more fundamental
direction. For example, they are waiting to see if any of the
central banks will turn hawkish," a Singapore-based trader said.
Australia's central bank, which decided to keep its main
cash rates steady at 4.75 percent as widely expected, said it
expected the global economy to continue to expand.
Take a look at Asia's central banks' recent moves,
click
Brent crude rose above $112 a barrel on Tuesday as the
ongoing unrest in the Middle East and North America threatened
to further reduce crude supplies.
A sustained period of higher oil prices would significantly
affect developing economies but is unlikely to derail their
strong recovery from the global financial crisis, a senior World
Bank economist said.
Separately, the IMF warned extended higher oil prices would
hit world growth.
Spot silver hit an intra-day high of $34.11 and eased
to $34.08. It struck a 31-year high at $34.30 last week.
Precious metals prices 0642 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1414.66 3.81 +0.27 -0.34
Spot Silver 34.08 0.28 +0.83 10.43
Spot Platinum 1803.68 -1.31 -0.07 2.05
Spot Palladium 795.75 1.28 +0.16 -0.47
TOCOM Gold 3748.00 25.00 +0.67 0.51 46764
TOCOM Platinum 4838.00 -9.00 -0.19 3.02 12002
TOCOM Silver 89.40 2.10 +2.41 10.37 1761
TOCOM Palladium 2116.00 11.00 +0.52 0.91 248
COMEX GOLD APR1 1415.40 5.50 +0.39 -0.42 7101
COMEX SILVER MAR1 34.06 0.25 +0.74 10.07 132
Euro/Dollar 1.3816
Dollar/Yen 82.16
TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months
Reuters
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