Gold prices firm

and violence in the Middle East and North Africa underpinned the metal’s safe-haven appeal.
The precious metal is struggling to overcome strong resistance near the previous session’s record high of US$1 447,40, but remains firmly supported at current levels, analysts said.
Spot gold was bid at US$1 434,50 an ounce at 1230 GMT, against US$1 429,49 late in New York on Thursday. US gold futures for April delivery rose 50 cents to
US$1 435,40.
“There are various macro supports for gold, like (concerns over) euro zone debt levels, which have resurfaced with Portugal, (and) continuing problems in the Middle East, North Africa region,” said VM Group analyst Carl Firman.
Worries about the financial health of heavily-indebted Portugal were stoked by a two-notch downgrade of the country’s credit ratings by rating agency Standard & Poor’s, a day after its Prime Minister Jose Socrates resigned.
The euro eased 0,3 percent against the dollar in early afternoon trade, while Portuguese borrowing costs hit new highs on Friday following the ratings cut.
European leaders agreed at a summit in Brussels on Thursday to increase their financial rescue fund to 440 billion euros by June, but avoided discussing Portugal, which is under pressure to seek a bailout after Socrates’ resignation.
“The EU summit in Brussels has once again revealed the lack of unity of state and government heads: the financing of the current EU rescue fund remains uncertain and the payments into the projected capital stock for the future bailout mechanism have been changed again,” Commerzbank said in a note.
Ongoing violence in the Middle East and North Africa also supported gold as a haven from risk.
Western warplanes struck Libyan ground forces last Friday, but a nearly week-old campaign has yet to deliver a crippling blow to Muammar Gaddafi’s troops.
For the moment, the metal remains constrained by chart pressures, with strong resistance seen for the metal just above Thursday’s record high.
“(Gold) managed to make fresh highs but that lack of follow through was a bit of a disappointment,” said ScotiaMocatta in a note.
“The metal traded up as high as 1 447 to set a fresh record . . . (but) we think the move was a bit forced.”
Despite gold’s recent strong performance, inflows into exchange-traded funds backed by the precious metal remained lacklustre, with holdings of the largest, New York’s SPDR Gold Trust, down by another 0,9 tonnes on Thursday.
They are so far on track to fall more than 65 tonnes this quarter alone, which would be the fund’s largest quarterly outflow since it was launched in 2004. However, interest in bullion from other sources is outweighing these outflows.
The People’s Bank of China said last Friday that concerns about inflation would trigger demand for gold as a store of value, though it noted the precious metal’s bull run may be near its end.
“Clearly, the PBoC has become quite concerned about inflationary pressures, and with growing concerns across developed markets and rising geopolitical conflict, they see the yellow metal playing an important role as a store of value,” UBS said in a note.
Silver was at US$37,47 an ounce versus US$37,12, having retreated from the previous session’s 31-year high at US$38,13 an ounce.
Holdings of the largest silver ETF, the iShares Silver Trust, leapt to a record 11,140 tonnes on Thursday.
Platinum was at US$1 747,50 an
ounce against US$1 749, while palladium was at US$749,47 against US$748,97. – Reuters.