Gold nears record highs amid violence

in the Middle East and North Africa pushed oil prices to 2-1/2 year highs and burnished the metal’s safe-haven appeal.
Spot gold was bid at US$1 437,15 an ounce at 0927 GMT, against $1 431,95 late in New York last Friday. US gold futures for April delivery rose US$9,30 an ounce to US$1 437,90.
A downgrade of Greece’s credit rating by Moody’s also brought euro zone sovereign debt concerns back into the spotlight, undermining confidence in the euro. Concerns over euro zone debt pushed gold sharply higher last year.
“There is all sorts to support gold -high oil prices, low real interest rates, and the fact that there are constant reminders that we still have debt problems in Europe,” said Standard Bank analyst Walter de Wet.
Violence in Libya, where protests over Muammar Gadaffi’s 41-year rule are feared to be degenerating into civil war, and elsewhere in North Africa and the Middle East have boosted gold’s appeal as a haven from risk in recent weeks, sending prices to a record US$1 440,10 an ounce last week.
Troops loyal to Gaddafi have launched counter-offensives against rebel-held towns, increasing fears that Libya is heading for a civil war rather than the swift revolutions seen in Tunisia and Egypt.
Unrest simmered elsewhere in the region. Saudi security forces detained at least twenty two minority Shi’ites who protested last week against discrimination, activists said on Sunday, as the kingdom tried to keep the wave of Arab unrest outside it’s borders.
The news helped lift US crude prices by more than US$2 a barrel to a 30-month high above US$106. Saudi Arabia is home to most of OPEC’s spare oil output capacity.
“The energy complex has not only a high weighting in commodity price indices, but also in consumer price indices,” said Peter Fertig, a consultant at Quantitative Commodity Research.
“Therefore, the surge of oil prices will have an impact on CPI inflation.”
“As gold has the reputation to serve as a hedge against inflation, the fear of rising inflation rates is another factor supporting gold and other precious metals.”
Appetite for gold in Asia remained strong, with Indian gold futures hitting record highs and the Japanese retail price for gold hitting a twenty-eight-year high above 4 000 yen (US$48,60) per gram on Monday.
Gold should push higher from it’s near-record levels due to it’s appeal as a safe haven, forecasters told the world’s largest mining conference on Sunday.
JPMorgan analyst, Michael Jansen told the Prospectors and Developers (PDAC) conference in Toronto that he expects gold prices to average US$1 465 an ounce this year.
Among other precious metals, silver was bid at US$36,40 an ounce against US$35,61.
The metal rose to it’s highest since early 1980 in earlier trade at US$36,52 an ounce.
The gold/silver ratio meanwhile fell below 40:1 for the first time since February 1998, demonstrating silver’s outperformance of gold.
“With the situation in the MENA region still extremely volatile and oil continuing (to) rise, both gold and silver are likely to extend on a mix of safe-haven and anti-inflationary hedging,” said TheBullionDesk.com analyst James Moore.
Meanwhile, platinum was at US$1 834,99 an ounce against US$1 841, while palladium was at US$811 against US$809,50. – Reuters.