* Gold retreats as investors sell after safe-haven rally
* Tensions flare in North Africa as Libya fights protests
* U.S. stocks down 2 pct but Treasury bonds, oil rally
* Coming up: U.S. existing home sales data due Wednesday
(Recasts, adds details, graphic)
By Frank Tang
NEW YORK, Feb 22 (Reuters) - Gold fell back toward $1,400
an ounce on Tuesday, breaking a six-session rally, as turmoil
in Libya prompted bullion investors to take profits and as
sharp losses in equities and other commodities markets prompted
margin selling.
Bullion declined as world stocks fell sharply on the revolt
in Libya which lifted crude prices to 30-month highs and
rekindled fears of inflation and slower global growth if the
unrest lingers. Agricultural commodities led by grains also
fell broadly.
Investors also swapped riskier assets for safe-haven U.S.
Treasury bonds, whose prices rose on Tuesday. Gold has been
used as a speculative play as traders are betting rising
political tensions across the Arab world will benefit gold.
"Libya is a political situation but it's not necessarily
one that's going to spill over. Until there are additional
signs of it spreading beyond Libya to other areas, gold is
going to take a breather here," Frank McGhee, head precious
metals trader of Integrated Brokerage Services.
Bullion gained 1.3 percent on Monday, hitting a seven-week
high as as violence flared in north Africa and the Middle East,
raising interest in the precious metal as a haven from risk.
Spot gold <XAU=> slipped 0.4 percent to $1,399.85 an ounce
by 2:06 p.m. EST (1906 GMT), having earlier fallen as low as
$1,392.54.
U.S. gold futures for April delivery <GCJ1> settled at
$1,401.10, up $12.50 from Friday's close, with volume about 15
percent above its 30-day norm. Gold futures' gains were largely
due to pent-up demand as U.S. markets were shut on Monday for
the President's Day holiday.
Silver <XAG=> came under pressure in line with other
industrial commodities, falling by as much as 4.3 percent to a
low of $32.39 an ounce, as investors closed positions following
a three-day rally that lifted prices by nearly 4 percent.
U.S. silver volume totaled 170,000 lots, one of its highest
turnover in the past four months, as traders returned after the
market was shut Monday.
Silver lost 2.3 percent to $33.09, having earlier hit its
highest since early 1980 at $34.30 an ounce, driven by limited
supplies for near-term delivery and the prospect for rising
demand as the wider economy recovers.
The gold-silver ratio, which shows how many ounces of
silver can buy one ounce of gold, rose to around 42 from
Monday's 13-year low near 41.
Growing unrest in the Middle East had fueled six straight
days of rising gold prices through Monday. A surge in the
dollar earlier in the day pulled prices back from seven-week
highs, but they have since recovered much of their early
losses.
Libya's Muammar Gaddafi vowed to die in Libya as a martyr
in an angry television address, as rebel troops said eastern
regions had broken free from his rule in a burgeoning revolt.
ID:nL3E7DM0K1]
Gold is approaching key resistance in the $1,410-1,425
area, and a break above that would likely signal a stronger
safe haven bid across global assets, Barclays Capital said.
(Graphic: http://link.reuters.com/wyq28r)
Technical analysts are also monitoring a possible relative
strength index divergence. RSI shows bullion is approaching the
traditionally overbought level at 70, and a falling RSI when
gold prices are rising could trigger a sell signal.
ALL-TIME HIGH EYED
Gold is now just 2 percent below December's record high of
$1,430.95 an ounce as economic uncertainty and lingering
concerns about sovereign debt provided underlying support.
"Geopolitical tensions in the MENA region continue to
fester, keeping risk aversion elevated (as evident in the poor
performance of equities across the globe) and enhancing the
appeal of safe-haven assets," Standard Bank said in a note.
"In addition, the surge in oil prices is keeping fears of
rising global inflation alive."
Platinum group metals also fell sharply. Palladium <XPD=>
dropped 6 percent to $802.97 for its biggest one-day loss since
May, while platinum <XPT=> lost 3.3 percent to $1,786.50.
Prices at 2:28 p.m. EST (1928 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCJ1> 1401.10 12.50 0.9% -1.4%
US silver <SIH1> 32.862 0.566 0.0% 6.2%
US platinum <PLJ1> 1786.30 -57.00 -3.1% 0.5%
US palladium <PAH1> 805.70 -52.00 -6.1% 0.3%
Gold <XAU=> 1400.30 -5.65 -0.4% -1.3%
Silver <XAG=> 33.11 -0.74 -2.2% 7.3%
Platinum <XPT=> 1785.24 -61.21 -3.3% 1.0%
Palladium <XPD=> 803.00 -50.88 -6.0% 0.4%
Gold Fix <XAUFIX=> 1401.00 6.50 0.5% -0.7%
Silver Fix <XAGFIX=> 32.89 -54.00 -1.6% 7.4%
Platinum Fix <XPTFIX=> 1821.00 2.00 0.1% 5.2%
Palladium Fix <XPDFIX=> 836.00 1.00 0.1% 5.7%
(Additional reporting by Jan Harvey and Amanda Cooper in
London; Editing by Marguerita Choy and Sofina Mirza-Reid)
