Gold rises above $1,400/oz on Libya tensions

10:34, 24 February 2011

LONDON. February 24. KAZINFORM Gold topped $1,400 an ounce on Wednesday as tensions in Libya increased interest in the metal as a haven from risk and the dollar fell, but gains were limited by concerns its run higher may have been overdone. Kazinform refers to Arab News.

Spot gold was bid at $1,411.10 an ounce at 1600 GMT, against $1,399.20 late in New York on Tuesday. US gold futures for April delivery rose to $1,403.3 an ounce.

A day earlier, risk aversion lifted bullion to its highest since Jan. 4, topping $1,410 an ounce on worries about escalating tensions in the Middle East and north Africa. Protests in the region this year have toppled the leaders of Tunisia and Egypt.

A 2.4-percent rise in gold last week raised concerns the metal was at unsustainable levels, but news from Libya supported prices as leader Muammar Qaddafi vowed to crush a mounting revolt against his four decades of rule.

"It is dominated by the Middle East fears and the weaker dollar," Standard Bank analyst Walter de Wet said of the market.

"We think we could easily test the highs again for gold," he added. "It could go all the way to $1,440 till it starts looking a bit stretched from a fundamental perspective." The metal set a record $1,430.95 in December last year.

Gold earlier hit a session high of $1,413.70 as the dollar weakened after after US existing home sales data. The data showed a rise in home sales but a fall in house prices.

A weaker dollar attracts non-U.S investors to dollar-priced metals. Kazinform cites Arab News. See www.arabnews.com for full version.

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