* Gold edges up, Middle East, euro zone in focus
* China adviser says Beijing should buy more gold
* Coming Up: Germany Industrial output Jan; 1100 GMT
(Updates prices)
By Amanda Cooper
LONDON, March 9 (Reuters) - Gold rose on Wednesday,
supported by investor concern over the violence across the
Middle East and the resurgence of discomfort over the euro
zone's finances ahead of a key summit this week.
Crude oil arrested a two-day slide as worries about the
turmoil in the Arab world, where pro-democracy protests are
spreading from Libya to Yemen and Kuwait, outweighed
reassurances from OPEC of ample spare capacity.
The euro fell below its recent four-month highs against the
dollar, as investors shifted their attention away from the
prospect of an imminent rate rise to the region's debt problems,
which leaders from the single currency bloc will discuss at a
summit on Friday.
Euro-priced gold <XAUEUR=> was set for a fourth daily rally,
its strongest run in two months.
Gold priced in dollars <XAU=> rose 0.4 percent to $1,433.30
an ounce by 1224 GMT, reversing the net loss for the week, which
would have been the first since late January.
COMEX April futures <GCJ1> rose 0.5 percent to $1,433.90.
"I could see (the price) down another $10 but you have to
continue buying," said ANZ head of metal sales Peter Hillyard.
"There are bigger macro issues, to do with economies and
recessions and double-dips and the Middle East. There are enough
bullish factors in play that if it isn't one, it will be another
and on balance, the market is looking for those bullish signs."
ETFS RISE
Reflecting investor appetite for gold was another pickup in
holdings of the metal in some of the world's largest
exchange-traded funds, which have risen by over 340,000 ounces
so far this week to over 61 million ounces. []
Gold has risen by nearly 10 percent in the last seven weeks,
since protests in Tunisia and Egypt spread to other parts of the
Middle East and North Africa, triggering a 20-percent rise in
crude oil and raising concern over the chances of an oil-price
shock to the global economic recovery.
The price hit a record $1,444.40 an ounce on Monday and has
since retreated by about 1 percent from that level, in line with
the drop in the oil price, which often trades in tandem with
gold, especially if investors are seeking safe-haven assets.
"I feel it is consolidating, waiting for any lead out of
Libya. We'll see what happens on (Friday) prayer day around the
Gulf, and then we'll see whether or not there is need for
concern. I think that's the focus we have to follow," said
Jonathan Barratt, managing director of Commodity Broking
Services in Melbourne.
"If nothing happens on Friday, then I feel it will be a sigh
of relief that the contagion won't actually spread. As a result
of that, if we don't see it spread, then gold would come under
pressure."
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For a graphic on correlation between gold and oil, click:
http://link.reuters.com/huq48r
For a graphic technical analysis on spot gold:
http://graphics.thomsonreuters.com/WT1/20110903102409.jpg
For a factbox on silver ETF, click: []
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Tensions in Libya remained. Tanks and warplanes intensified
their offensive against rebels on Tuesday, as the United States
stressed that any no-fly zone to hobble Muammar Gaddafi's forces
had to have global backing. []
Separately, a Chinese government adviser was quoted by local
media reports as saying that the second largest consumer of the
precious metal should use some of its $2.85 trillion foreign
exchange reserves to buy more gold. []
"Another supportive factor for gold demand and therefore
gold prices are likely to be repeated calls for the
diversification of China's currency reserves," said Commerzbank
analysts in a daily note.
Silver rallied for a fourth day, rising 0.6 percent to
$36.22 an ounce, supported by the gains in gold and the ongoing
backwardation across the silver futures curve <0#SI:>, as well
as by continued inflows into ETFs. []
Platinum <XPT=> rose 0.6 percent to $1,813.62 an ounce,
while palladium <XPD=> gained 0.9 percent to trade at $796.47.
(Additional reporting by Lewa Pardomuan in Singapore; editing
by James Jukwey)
