* Gold gains for third day as Libya violence worsens
* Silver gains nearly 2 pct to 31-year highs; ratio dips
* Bernanke plays down impact of oil price spike on economy
* Coming up: US ADP private-sector employment data Wed.
(Recasts, adds comments, updates prices, dateline previously
NEW YORK/LONDON)
By Frank Tang
NEW YORK, March 1 (Reuters) - Gold prices rose more than 1
percent on Tuesday to within a dollar of their record high, and
silver hit a 31-year peak, as chaos in Libya and political
turmoil in the Arab world prompted safe-haven buying.
Unrest across the Middle East and North Africa, which
unseated leaders in Tunisia and Egypt before spreading across
Libya, Bahrain, Yemen and Iran, fueled a 6 percent rise in gold
prices in February.
"What gold needed was a catalyst, and it found it in the
form of tensions that are surfacing in the Middle East and
rising oil prices, which served as an inflationary threat and
also led to political instability," said Mark Luschini, chief
investment strategist of Janney Montgomery Scott, a brokerage
that manages $53 billion in client assets.
On Tuesday, Iranian security forces fired teargas and
clashed with anti-government demonstrators protesting the
treatment of opposition leaders. The United States said Libya
could descend into civil war if Muammar Gaddafi refuses to
quit, after word of unspecified Western military preparations.
[] []
Gold has rallied strongly since political unrest sent oil
prices to 2-1/2 year highs, which stoked fears of inflation and
the possibility of high energy prices stalling economic growth.
U.S. light sweet crude oil futures soared $2 to $99 a barrel.
Spot gold <XAU=> rallied to a session peak of $1,430.70 an
ounce -- its highest since Dec. 7, when it hit a record
$1,430.95. The metal gained 1.3 percent to $1,429.80 an ounce
by 1:28 p.m. EST (1828 GMT), extending its winning streak to
three consecutive trading days.
U.S. April gold futures <GCJ1> rose 1.3 percent to $1,428.8
an ounce.
Bullion rose 6 percent in February, its largest monthly
rise since August. It traded mostly sideways last week, then
gained on Tuesday on resurgent safe-haven bids.
Silver <XAG=> hit a fresh 31-year high at $34.57 an ounce
and later climbed 1.9 percent to $34.46. Silver has risen about
11 percent this year.
The gold-silver ratio, which shows how many ounces of
silver it takes to buy one ounce of gold, approached a 13-year
low. Silver has risen amid limited supplies for near-term
delivery and on prospects of rising demand for industrial
metals as the economy recovers.
BERNANKE COMMENT HELPS
Federal Reserve Chairman Ben Bernanke told the Senate
Banking Committee on Tuesday that the recent surge in oil
prices was unlikely to have a big impact on the U.S. economy,
but could dampen growth and raise inflation if sustained.
[]
Bernanke's comments boosted gold as he offered no hint that
the U.S. central bank was considering winding down its loose
monetary policy, which also sent the U.S. dollar to a 3-1/2
month low against major currencies. []
"From the start of crude oil's ascent based on Libya, you
are seeing general risk issues become more of a front burner in
peoples' psyche," said James Dailey, portfolio manager of the
TEAM Asset Strategy Fund. <TEAMX.O>
"You've had the U.S. long-term Treasuries rally. You've had
a lot of the things that traditionally occur when people start
to get afraid, all except the U.S dollar rally," Dailey said.
Since the Fed cut interest rates to 0.25 percent in
response to the global financial crisis in late 2008, gold has
risen 70 percent.
In a reflection of investor ambiguity on gold, holdings of
the metal dropped in the SPDR Gold Trust <GLD>, the world's
largest gold-backed exchange-traded fund.
Holdings fell for a fifth consecutive month in February,
marking its worst string of declines since the creation of the
fund in 2004.
Platinum <XPT=> gained 1.8 percent to $1,837.49 an ounce,
while palladium <XPD=> climbed 2.6 percent to $814.80 an
ounce.
Prices at 1:45 p.m. EST (1845 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold <GCJ1> 1428.30 18.40 1.3% 0.5%
US silver <SIK1> 34.400 0.580 1.7% 11.2%
US platinum <PLJ1> 1842.20 35.90 2.0% 3.6%
US palladium <PAM1> 818.50 18.90 2.3% 1.9%
Gold <XAU=> 1427.44 16.59 1.2% 0.6%
Silver <XAG=> 34.40 0.60 1.8% 11.5%
Platinum <XPT=> 1837.49 32.50 1.8% 4.0%
Palladium <XPD=> 814.80 20.33 2.6% 1.9%
Gold Fix <XAUFIX=> 1420.75 6.25 0.4% 0.7%
Silver Fix <XAGFIX=> 34.37 88.00 2.6% 12.2%
Platinum Fix <XPTFIX=> 1828.00 19.00 1.1% 5.6%
Palladium Fix <XPDFIX=> 812.00 8.00 1.0% 2.7%
(Additional reporting by Amanda Cooper and Rebekah Curtis in
London; Editing by Walter Bagley and Jim Marshall)
