* Violence rages in Libya; oil prices arrest losing streak
* Euro zone debt takes centre-stage ahead of Friday summit
* Gold ETF holdings edge higher
(Updates prices)
By Amanda Cooper and Jan Harvey
LONDON, March 9 (Reuters) - Gold rose on Wednesday as
violence in North Africa and the Middle East stoked demand for
the metal as a haven from risk, and as worries over euro zone
debt returned to the spotlight ahead of a summit this week.
Gold tracked a recovery in crude oil, which arrested a
two-day slide as worries about turmoil in the Arab world, where
pro-democracy protests are spreading from Libya to Yemen and
Kuwait, outweighed OPEC assurances of ample spare capacity.
Spot gold <XAU=> was bid at $1,432.20 an ounce at 1511 GMT,
against $1,428.19 late in New York on Tuesday. U.S. gold futures
for April delivery <GCJ1> rose $5.50 an ounce to $1,432.70. Gold
prices fixed at $1,431 an ounce at 1500 GMT.
Euro-priced gold <XAUEUR=> was set for a fourth daily rally,
its strongest run in two months, while gold priced in Japanese
yen <XAUJPY=R> reached its highest since at least 1983.
"Gold will be underpinned by the geopolitical risk premium,
by inflationary concerns, and by the debt situation in Europe,
which I suspect will take on more importance in the next few
days," said Credit Agricole analyst Robin Bhar.
"The market is really eager to find out how this whole debt
crisis in Europe is settled," he said. "It's been lingering on
for a long, long time. It finally needs to be put to bed, or
Europe will suffer."
Euro zone leaders are expected to take the next cautious
steps in their year-long effort to quell the region's debt
crisis at a summit on Friday, attended by 17 heads of state.
The top item on the agenda is to agree a "competitiveness
pact", a deal Germany and France are pushing the rest of the
euro zone to adopt. However, the meeting is unlikely to produce
a breakthrough. []
"The market is becoming increasingly despondent about the
likelihood of a comprehensive solution that also provides some
liquidity support for the higher-yielding issuers," said Credit
Agricole in a note.
Concern over euro zone sovereign debt was a major factor
driving gold's 30 percent price rise in 2010. It has since
extended gains to a record $1,444.40 an ounce, largely on
safe-haven buying linked to unrest in the Middle East region.
LIBYA UNREST
Libyan forces loyal to leader Muammar Gaddafi closed in on
rebels in the western city of Zawiyah on Wednesday, surrounding
them with tanks and snipers in the main square, a resident and a
rebel fighter said. []
With the international community still hesitant about how to
respond to the crisis in Libya, a counter-offensive by Gaddafi
has halted a rebel advance in the east and left others stranded
in the western cities of Zawiyah and Misrata.
"Gold prices... (are) still underpinned by the MENA unrest
and uncertainty over the ongoing violence in Libya," said VTB
Capital analyst Andrey Kryuchenkov in a note.
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.
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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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Silver rallied for a fourth day, rising 0.3 percent to
$36.10 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 0.2 percent to $1,806.24 an ounce,
while palladium <XPD=> was little changed at $789.
(Editing by Alison Birrane)
