* Gold up as oil soars on escalating clashes in Libya
* Rise in US nonfarm payrolls supports gold
* Silver rides gold's coattails to 31-year high
* Coming up: CFTC positions data, 3:30 p.m. EST Friday
(Adds CFTC trade data, graphic)
By Frank Tang
NEW YORK, March 4 (Reuters) - Gold rose above $1,430 an
ounce on Friday, while silver surged 3 percent to 31-year
highs, as soaring oil prices fueled by widening clashes in
Libya prompted investors to pile into safe havens.
Bullion hit a record high of $1,440.10 an ounce on
Wednesday, notching its fifth consecutive weekly gain on fears
that Libya's escalating unrest could spread across the Arab
world.
Wall Street lost nearly 1 percent and the dollar declined
as upbeat U.S. jobs data was offset by fears that rising
political tensions in North Africa and the Middle East could
crimp economic growth. []
"It's really all about oil, and I suspect that's going to
be the pattern next week as well. Gold's uncertainty hedge and
ultimate currency roles continue to be very much in place,"
said Bill O'Neill, partner of LOGIC Advisors.
U.S. crude prices jumped to their highest levels since
September 2008 as Libyan security forces cracked down on
protesters in Tripoli and clashed with rebels near the major
oil terminal of Ras Lanuf.
Spot gold <XAU=> hit a high of $1,431.85 an ounce and was
up 0.8 percent at $1,427.31 by 2:08 p.m. EST (1908 GMT). Gold
fixed at $1,427 in London.
U.S. gold futures for April delivery <GCJ1> settled up
$12.20 at $1,428.60, with volume down nearly 50 percent from
the previous session and 30 percent below its 30-day average.
The positive correlation between gold and oil has been
strong of late, but its prospects appear questionable going
forward.
Turnover has been weaker than usual during gold's rally,
prompting some analysts to question whether the precious metal
has much upside potential without the aid of soaring oil prices
and geopolitical tensions.
Net long positions in U.S. gold futures contracts held by
speculators rose nearly 10 percent last week as bullion prices
rallied 2.5 percent, data from the U.S. Commodity Futures
Trading Commission (CFTC) showed on Friday.
Spot silver <XAG=> gained 3.3 percent to $35.31 an ounce,
having earlier hit a high of $35.46, its loftiest price since
1980.
Silver has risen on record coin buying in a tight physical
market and strong demand for industrial metals as the economy
recovers.
Terry Hanlon, president of precious metals dealer Dillon
Gage Metals, said that demand for the popular one-ounce
American Eagles silver bullion coins "way exceeds" supply, and
the trend could continue for a long time.
Silver eagles hit a record 6.4 million ounces in the first
month of 2011, U.S. Mint data showed. February sales rose
year-on-year but was lower than January's level.
The gold-silver ratio, which shows how many ounces of
silver it takes to buy one ounce of gold, fell to a 13-year
low, the weakest since 1998 when billionaire Warren Buffett
bought 130 million ounces of silver.
(Graphic: http://link.reuters.com/jyf48r)
Holdings in the world's largest silver ETF, the iShares
Silver Trust <SLV>, rose to 10,794.89 tonnes by March 3, the
largest since early January. []
U.S. EMPLOYMENT REBOUNDS
Gold held gains even as data showed U.S. employers hired
workers at the fastest pace in nine months in February and the
jobless rate slipped to a nearly two-year low of 8.9 percent,
showing the economy is finally kicking into a higher gear.
[]
In January, the metal lost over 6 percent as signs of an
improving global economy and easing worries about a European
debt crisis weighed on bullion's safe-haven appeal.
The U.S. Federal Reserve in November resumed buying
long-dated government bonds to keep interest rates down, a
process known as the second round of quantitative easing or
QE2.
With the program now at its midpoint, investors are
wondering how long gold can keep rising before the Fed decides
to raise interest rates.
Comments from the European Central Bank stoked expectations
that euro zone monetary policy would tighten sooner rather than
later and knocked gold sharply lower on Thursday.
Among other precious metals, platinum <XPT=> gained 0.6
percent to $1,834.24 an ounce and palladium <XPD=> eased 0.4
percent to $808.72.
Prices at 2:08 p.m. EST (1908 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCJ1> 1428.60 12.20 0.9% 0.5%
US silver <SIK1> 35.327 1.000 0.0% 14.2%
US platinum <PLJ1> 1837.90 4.90 0.3% 3.4%
US palladium <PAM1> 809.80 -5.00 -0.6% 0.8%
Gold <XAU=> 1427.31 11.72 0.8% 0.6%
Silver <XAG=> 35.31 1.14 3.3% 14.4%
Platinum <XPT=> 1834.24 10.75 0.6% 3.8%
Palladium <XPD=> 808.72 -3.28 -0.4% 1.2%
Gold Fix <XAUFIX=> 1427.00 9.00 0.6% 1.2%
Silver Fix <XAGFIX=> 34.43 -10.00 -0.3% 12.4%
Platinum Fix <XPTFIX=> 1828.00 3.00 0.2% 5.6%
Palladium Fix <XPDFIX=> 811.00 0.00 0.0% 2.5%
(Additional reporting by Jan Harvey in London; editing by Jim
Marshall)
