* Gold set for fourth straight weekly gain on Mideast unrest
* U.N. Security Council to meet on Libya later
* Palladium on track for biggest 1-week drop since Jul. 2010
(Updates prices, adds comment)
By Jan Harvey
LONDON, Feb 25 (Reuters) - Gold prices rose above $1,400 an
ounce on Friday and were on track for a fourth straight week of
gains, supported by interest in the metal as a haven from risk
as violence flared in Libya and across the Middle East region.
The U.N. Security Council is to meet later to discuss a
draft proposal for sanctions against Libyan leaders, who are
battling for survival against a popular uprising in which French
estimates say some 2,000 people may have died. []
Spot gold <XAU=> was bid at $1,406.20 an ounce at 1432 GMT
against $1,401.47 late in New York on Thursday, and is on track
for its fourth consecutive weekly gain. U.S. gold futures for
April delivery <GCJ1> fell $8.70 an ounce to $1,407.10.
"We have seen a big decrease in risk appetite, a fall,
certainly after mid-February, in equities and the industrial
metals, but an increase in oil with uncertainty over a supply
shock," said VM Group analyst Carl Firman.
"Alongside that you have risk aversion, and we have seen
gold and silver benefit. And I think that is here to stay until
the situation becomes clearer."
On Thursday spot prices rose as high as $1,417.92 an ounce,
close to the metal's record high of $1,430.95.
While signs emerged this week's elevated risk aversion was
coming off the boil -- European stocks rose, while German
government bond futures retreated a touch -- strength in oil
prices this week is still unnerving investors.
U.S. crude futures have rallied more than 12 percent so far
this week, their biggest weekly gain since March 2009, amid
concerns over supply from major oil producer Libya, and worries
that unrest there may spread. []
Meanwhile, nominally "safer" assets like gold, government
bonds and the Swiss franc have all benefited from this week's
unrest, with the Swiss currency hitting record highs against the
dollar. [] []
"People are looking to buy dips in gold, from an investment
perspective, on the back of the Middle East issues," said
Standard Bank analyst Walter de Wet. "If tension eases there, I
can see gold coming off."
UNREST EYED
The unfolding situation across the Middle East and North
Africa will remain in focus next week. Civil unrest first broke
out in Tunisia, from where it spread quickly to Egypt, and then
to Bahrain, Libya, Yemen and others.
Saudi Arabia this week unveiled a $37 billion package to try
to insulate the kingdom from the wave of protests across the
Arab world, while Algeria lifted a 19-year-old state of
emergency as it tried to appease opposition groups.
"In order for already high gold and silver prices to be
sustained, the market may require a steady diet of increased
strife in the Middle East, coupled with higher oil prices," HSBC
analyst James Steel said in a note.
"As long as Saudi Arabia remains stable the risk factor in
the Middle East is to some degree contained."
Investment demand in developed markets for products like
gold-backed exchange-traded funds remained soft. Holdings of the
largest, New York's SPDR Gold Trust <GLD> fell to a nine-month
low at 1,211.568 tonnes on Thursday. []
Holdings of the largest silver ETF, the iShares Silver Tust
<SLV>, meanwhile, rose to a six-week high at 10,666.35 tonnes on
Thursday. []
Silver <XAG=> was bid at $32.80 an ounce against $32.09. The
metal is on track for a fifth consecutive weekly gain, although
it slipped sharply from 31-year highs on Thursday, putting in
its worst one-day performance since December.
Elsewhere, platinum <XPT=> was at $1,785.99 an ounce against
$1,777.49, while palladium <XPD=> was at $782.22 against $771.
(Editing by James Jukwey)
