* Oil steady, underpinned by Middle East unrest
* Gold may retrace to $1,416 - technicals
* Coming up: U.S. ICSC chain stores; 1145 GMT
(Adds details, comments; updates prices)
By Rujun Shen
SINGAPORE, March 22 (Reuters) - Gold prices edged higher on
Tuesday on concerns about inflation triggered by high oil prices
and an increased safe-haven appeal amid growing tensions in the
Middle East following western powers' air strikes on Libya.
Investors also kept an eye on Japan's progress in averting a
full-blown nuclear disaster, caused by a devastating earthquake
and tsunami on March 11 that prompted a surge in physical gold
premiums to three-year highs as buyers in less affected parts of
the nation stretched supply.
Spot gold edged up 0.4 percent at $1,430.45 an ounce
by 0306 GMT, after reaching $1,434.70 in the previous session,
just $10 off the record high hit on March 7.
U.S. gold gained 0.3 percent at $1,430.80.
"The tensions in Libya and the overall Middle East and North
Africa region is supportive of gold prices. There is little
doubt that gold would test a new high in the near future," said
Li Ning, an analyst at Shanghai CIFCO Futures.
"In the medium to long term, concerns about inflation will
continue to buoy gold."
Li added that inflationary concerns have spread from
emerging economies including China, to developed economies
including euro zone nations.
A prolong period of high oil prices could help fan up
inflation, and in turn boost demand for gold, seen as a hedge
against inflation.
Brent crude futures were supported near $115 on Tuesday by
supply concerns triggered by the spreading unrest in the Middle
East, while uncertainty about demand from the world's No. 3
consumer Japan capped gains.
Japan appears to be making progress containing the nuclear
crisis as it restored power cables to all six reactors and
started a pump at one of them to cool overheating nuclear fuel
rods. But rising smoke and haze from two of the most threatening
reactors suggested the battle was far from won.
Holdings in the world's largest gold-backed exchange-traded
fund, SPDR Gold Trust , fell a hefty 10.616 tonnes, its
biggest one-time fall since late January, suggesting some
investors might have lost interest in bullion for the time
being.
The sentiment was echoed by a technical analysis, which
indicated that gold may retrace to $1,416, as the current rally
is exhausted, according to Reuters market analyst Wang Tao.
Gold futures on the Tokyo Commodity Exchange also
edged up 0.4 percent at 3,734 yen per gram, or $1,430.12 an
ounce.
"Gold in yen jumped up this morning, and we've seen some
selling back," said a trader at a Tokyo-based bullion house.
Premium for gold bars in Tokyo were steady at $1.50 to $2
over London spot prices, he added.
Spot silver tracked gold's strength and hit an
intra-day high at $36.33 an ounce, just a hair off a 31-year
high of $36.70 hit in early March.
Precious metals prices 0306 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1430.45 5.40 +0.38 0.77
Spot Silver 36.24 0.19 +0.53 17.43
Spot Platinum 1746.50 4.50 +0.26 -1.19
Spot Palladium 746.50 1.50 +0.20 -6.63
TOCOM Gold 3734.00 15.00 +0.40 0.13 41105
TOCOM Platinum 4592.00 65.00 +1.44 -2.21 9850
TOCOM Silver 94.30 2.70 +2.95 16.42 965
TOCOM Palladium 1953.00 49.00 +2.57 -6.87 257
COMEX GOLD APR1 1430.80 4.40 +0.31 0.66 4997
COMEX SILVER MAY1 36.28 0.27 +0.76 17.24 2233
Euro/Dollar 1.4222
Dollar/Yen 80.95
TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months
(Editing by Himani Sarkar)
Reuters
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