* Spreading Middle East unrest spurs safety demand for gold
* Palladium hits 10-yr high, silver at 31-yr peak
* Supply concerns, industrial demand to underpin PGMs
(Adds comment, graphic; updates prices)
By Chikako Mogi
SINGAPORE, Feb 21 (Reuters) - Gold rose to a seven-week high
on Monday as spreading unrest in the Middle East burnished the
metal's appeal as a safe-haven asset, while prices of silver and
palladium hit historic highs on expectations of growing
industrial demand.
Gold added to a weekly gain of nearly 3 percent last week
and was poised for further upside on fresh news from North
Africa and the Middle East, where revolutions which deposed the
presidents of Tunisia and Egypt have inspired protests across
the region, threatening the grip of long-entrenched autocratic
leaders.
Spot gold climbed to a seven-week high of $1,396.1,
before easing slightly to $1,395.9 per ounce as of 0658 GMT.
Gold is poised for a sixth straight session of gains.
U.S. markets are closed on Monday for a holiday.
U.S. gold futures for April delivery climbed 0.7
percent to $1,395.90 per ounce, compared to Friday's settlement
at $1,388.60.
"With the unrest in the Middle East and North Africa,
dealers couldn't leave for a long weekend with short positions,
and this reflects investor sentiment for a flight to safety,"
said Yuichi Ikemizu, Tokyo branch manager for Standard Bank,
adding that gold prices were likely to keep inching higher.
Spot gold may rise to its Jan. 3 high of $1,423.57 per ounce
as it has ignored bearish signals and continued to shoot up,
says Wang Tao, a Reuters market analyst for commodities and
energy technicals.
The world's largest gold-backed exchange-traded fund, the
SPDR Gold Trust , said holdings fell to 1,223.098 tonnes by
Feb. 20, its lowest in nine months, from 1,224.008 tonnes on
Feb. 15.
Traders said there was slightly higher demand for gold bars
in the Middle East, mainly due to the unrest.
SILVER HITS 31-YEAR HIGH
Expectations of growing industrial demand on an improving
world economy and a rally in the overall precious metals market
also helped hoist silver to its highest level since 1980.
Spot silver rose to its 31-year high at $33.18 an
ounce.
The silver market has become overbought, as the Relative
Strength Indicator rose to a three-month high near 77. An RSI
reading above 70 indicates an overbought market.
"Cash silver is expensive now compared to the forward
market," said a Hong Kong-based trader, "There might be a
squeeze going on."
Forward rates on Reuters pages indicated at -0.36,
-0.37, -0.37, -0.40 and -0.37 percent for one, two, three, six
and 12 months respectively.
A deepening backwardation -- which means futures are cheaper
than spot prices -- reflects tightness in the market.
The gold-silver ratio, used to measure how many ounces of
silver are needed to buy one ounce of gold, dropped to a 13-year
low of 42.18.
Holdings in the world's largest silver-backed
exchange-traded fund, iShares Silver Trust , rose to
10,519.05 tonnes by Feb. 18 from 10,438.56 tonnes on Feb. 17.
Platinum gained 0.5 percent to $1,842.25 an ounce
while palladium hit a 10-year high of $855.50 in early
trade.
Traders said platinum and palladium may see further gains on
a solid demand outlook and supply concerns.
Precious metals prices 0658 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1395.90 7.32 +0.53 -1.66
Spot Silver 33.17 0.71 +2.19 7.49
Spot Platinum 1842.25 8.75 +0.48 4.23
Spot Palladium 849.66 1.41 +0.17 6.27
TOCOM Gold 3739.00 23.00 +0.62 0.27 43860
TOCOM Platinum 4977.00 15.00 +0.30 5.98 9075
TOCOM Silver 87.70 3.40 +4.03 8.27 2597
TOCOM Palladium 2293.00 24.00 +1.06 9.35 430
COMEX GOLD APR1 1396.80 8.20 +0.59 -1.73 12917
COMEX SILVER MAR1 33.17 0.87 +2.69 7.19 6129
Euro/Dollar 1.3679
Dollar/Yen 83.17
TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months
(Additional reporting by Rujun Shen in SINGAPORE; Editing by
Clarence Fernandez)
Reuters
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