* Gold gets lift from dollar drop, oil rally, geopolitics
* Silver outperforms, boosted by industrial demand
* Coming up: U.S. FHFA home price report Tuesday
(Recasts, updates prices, market activity; changes dateline,
previously NEW YORK/LONDON)
By Frank Tang
NEW YORK, March 21 (Reuters) - Gold rose for a fourth day
on Monday, buoyed by a weaker dollar, rising oil prices and
investor jitters surrounding air strikes by Western powers on
Libya and Japan's struggle to avert nuclear disaster.
Gold trimmed early gains, following oil, but the metal
stayed within a whisker of its record $1,444.40 an ounce set on
March 7. A 1 percent rise in oil prices was enough to stoke
inflation worries that helped keep gold aloft, analysts said.
Silver soared nearly 3 percent on strong industrial demand
and near-term supply tightness, more than recouping last week's
sharp losses.
"Tensions in Libya are prompting people to move money out
of dollar-based assets and going for the safe play, which is
buying gold and silver, as both are benefiting in a really big
way today," said Zachary Oxman, managing director of TrendMax
Futures.
Gold <XAU=> rose 0.6 percent to $1,427.95 an ounce by 3:39
p.m. EDT (2039 GMT), while most-active U.S. April futures
<GCJ1> settled up 0.7 percent at $1,426.40.
Spot silver <XAG=> climbed 3.2 percent to $36.16 an ounce,
within striking distance to its 31-year high of $36.70, making
it the top gainer in the precious metals complex.
Reflecting bullishness among silver producers, Primero
Mining Corp <P.TO> said it bought call options at an average
strike price of $39 to cover its silver sales agreement to
another miner, Silver Wheaton. []
Total COMEX futures turnover was about 15 percent below its
30-day average and Friday's volume. U.S. futures volume has
been weaker than usual after a spike following last Tuesday's
sharp downward move.
U.S. Treasuries prices fell as progress in solving Japan's
nuclear crisis reduced safe-haven demand. A 1.5 percent rally
in U.S. stocks took some steam out of gold's rise.
Gold has gained on rising geopolitical tensions after a
series of U.N.-authorized Western air strikes against Libya's
Muammar Gaddafi, which Russian Prime Minister Vladimir Putin
said resembled "medieval calls for crusades." []
"You can't deny the escalating Middle East problems and the
oil price are all supportive factors, but I wonder whether the
big jump (in the gold price) is more weaker dollar-related,"
said Credit Agricole analyst Robin Bhar.
"It's all contributing to the safe-haven bid, and this week
is going to be important ... geopolitical risk factors are
uppermost in people's minds," Bhar said.
DOLLAR DROPS ON INTEREST RATE VIEW
The dollar fell against a basket of major currencies <.DXY>
to its lowest in 15 months, under pressure from the view that
U.S. interest rates would not rise any time soon compared to
other major economies such as the euro zone. []
Gold's traditional negative correlation to the dollar has
strengthened since the Japanese earthquake struck 10 days ago.
Over the longer term, however, gold's link with the dollar
could be erratic, traders said.
Adam Hewison, president of MarketClub.com, said his
technical models indicated gold could remain in a trading range
as it builds up energy for its next upward move.
Bullion will likely face technical resistance in the
$1,335-$1,440 area, the daily close when the metal surged to an
intraday record on March 7, he said.
Among platinum group metals, spot platinum <XPT=> gained
1.4 percent to $1,742.24.
Spot palladium <XPD=> rose 1.9 percent at $741.72 an ounce,
but is set for a near-8 percent decline this quarter, having
come under pressure from investors concerned about the impact
of the Japanese earthquake and soaring energy prices on the
broader economy.
On Tuesday, the market will watch the U.S. Federal Housing
Finance Agency (FHFA) home price index for clues to the health
of the U.S. housing sector, a major part of the national
economy.
Prices at 3:39 p.m. EST (1939 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US gold <GCJ1> 1426.40 10.30 0.7% 0.4%
US silver <SIK1> 36.001 0.943 0.0% 16.4%
US platinum <PLJ1> 1744.90 21.50 1.2% -1.9%
US palladium <PAM1> 742.30 11.10 1.5% -7.6%
Gold <XAU=> 1427.95 8.38 0.6% 0.6%
Silver <XAG=> 36.16 1.11 3.2% 17.2%
Platinum <XPT=> 1742.24 24.74 1.4% -1.4%
Palladium <XPD=> 741.72 13.72 1.9% -7.2%
Gold Fix <XAUFIX=> 1432.00 4.25 0.3% 1.5%
Silver Fix <XAGFIX=> 36.16 101.00 2.9% 18.1%
Platinum Fix <XPTFIX=> 1741.00 1.00 0.1% 0.6%
Palladium Fix <XPDFIX=> 743.00 2.00 0.3% -6.1%
(Additional reporting by Amanda Cooper in London; Editing by
David Gregorio)
