RTRS: Gold eases from 7-week peak, Middle East in focus
(Reuters) - Gold fell on Tuesday following six days of gains, as a rising dollar outweighed safe-haven demand arising from violence in the Middle East, and silver was set for its largest slide in a month.
Deadly protests in Libya pushed oil prices to 2-1/2 year highs, fanning fears of inflation and undermining investor confidence in the global economic outlook.
Libyan leader Muammar Gaddafi vowed defiance in the face of a mounting revolt against his 41-year rule on Tuesday, making a fleeting television appearance to scorn protesters and deny he had fled the country.
The gold price has risen by nearly 5 percent this month as protests in favor of democratic reform across North Africa and the Middle East turned bloody. Investors have grown increasingly uneasy that the crisis could spread.
Spot gold was last down 0.8 percent at $1,394.14 an ounce at 1025 GMT, having risen on Monday to its highest in about seven weeks. U.S. April gold futures were up 0.5 percent at $1,395.20 an ounce.
"It's not all one-way traffic," said Credit Agricole analyst Robin Bhar. "Obviously, we've had the turmoil escalating in the region and jitters and it's all understandable. Maybe this is the top for the time being."
He added, "Those safe-havens -- the dollar, Treasuries and gold -- should stay in demand, and other riskier assets such as equities and copper and so on will get sold off as we've seen in the last 12 hours or so."
LIBYA IN FOCUS
The dollar rallied broadly, creating a headwind for gold as the escalating tension in Libya prompted selling in higher-yielding assets such as the euro in favor of the U.S. currency and the Swiss franc.
"The current situation there is really akin to a keg of dynamite," said Ong Yin Ling, an investment analyst at Phillip Futures in Singapore.
"Whether Gaddafi will be toppled or whether we will witness a revolution, I think the final outcome is still uncertain. But the situation is likely to get worse before it gets better. Going forward, (gold) could still remain supported due to the crisis, which is unlikely to be resolved anytime soon."
Gold, like Treasuries and the Swiss franc, tends to draw a bid from investors in times of political or financial turmoil as it did in 2010 with the euro zone debt crisis.
Gold is still 2.7 percent below December's record high of $1,435.90 an ounce, but dealers in Asia reported a pick-up in sales of scrap after the spot price's near-4 percent rise over the prior six sessions.
Silver came under pressure in line with other industrial commodities, at one point falling by as much as 4.3 percent to a low of $32.39 an ounce.
The price had hit its highest since early 1980 above $34 an ounce on Monday, driven by limited supplies for near-term delivery and the prospect for rising demand as the wider economy recovers.
