* Outbreak of unrest in Oman fuels safe-haven buying
* Middle East, North Africa tensions lift oil, hurt dollar
* Silver prices set for 19 pct rise in February
(Updates throughout, changes dateline, pvs SINGAPORE)
By Jan Harvey
LONDON, Feb 28 (Reuters) - Gold rose above $1,410 an ounce
in Europe on Monday as turmoil in the Middle East region lifted
safe-haven buying and fuelled a fresh spike in oil prices,
stoking concerns over U.S. growth and knocking the dollar.
Spot gold <XAU=> was bid at $1,411.15 an ounce at 1028 GMT,
against $1,409.15 late in New York on Friday. U.S. gold futures
for April delivery <GCJ1> rose $2.50 an ounce to $1,411.80.
The metal is currently on track for its biggest one-month
rise since last August, but analysts say more may be needed to
take gold above its record high at $1,430.95 an ounce.
Unrest across the Middle East and North Africa, which
unseated leaders in Tunisia and Egypt before spreading across
Libya, Bahrain, Yemen and, most recently, Oman, has fuelled a 6
percent rise in gold prices this month.
"(Gold) found a bit (of support) early on after the news
from Oman overnight. Overall it is making a slow grind higher
with a lack of conviction," said Ole Hansen, senior manager at
Saxo Bank.
"As long we have all this uncertainty, precious (metals)
should prosper, but from the price action in gold over the last
couple of weeks some escalation is needed in order to bring
prices higher into new territory."
Omani police fired rubber bullets at stone-throwing
protesters demanding political reform on Sunday, killing two
people, and demonstrators set government buildings and cars
ablaze, witnesses said. []
In Libya meanwhile, rebels awaited a counter-attack by
Muammar Gaddafi's forces after the country's leader defied
demands that he quit to end the bloodiest of the Arab world's
wave of uprisings. []
Rebels holding Zawiyah, 50 km west of Tripoli, said about
2,000 troops loyal to Gaddafi had surrounded the city.
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OIL RALLIES
The news sparked a $1 a barrel rise in oil prices, which in
turn dragged the dollar down to a 3-1/2 month low against a
basket of six major currencies <.DXY>, as the unit was pressured
by concerns over the outlook for U.S. growth. [] []
"Higher oil prices are a double edged sword as far as gold
is concerned," said UBS in a note. "On the plus side, should
elevated oil prices persist, concerns about a corresponding
negative impact on global economic growth could spurn renewed
interest in safe havens."
"(But) rising oil prices also contribute to higher inflation
prints. This creates a difficult task for policy makers,
particularly the ECB (European Central Bank) and BoE (Bank of
England), who are debating a return to monetary policy
normalisation. The return of interest rate hikes will act as an
anchor for gold at lower price levels."
On the supply side of the market, a survey by sector
researcher Surbiton Associates showed Australia maintained its
number two ranking in gold output behind China in 2010 with
production of 266 tonnes. []
Among other precious metals, silver <XAG=> was bid at $33.37
an ounce against $33.31. Prices have rallied 19 percent this
month, their biggest one-month rise since May 2009.
The gold/silver ratio -- or number of ounces of silver
needed to buy an ounce of gold -- is currently around 42, having
hit a 13-year low near 41.5 last week as silver outperformed
other precious metals.
Among other precious metals, platinum <XPT=> was at
$1,801.49 an ounce against $1,803.50, while palladium <XPD=> was
at $788.22 against $785.40.
(Reporting by Jan Harvey; Editing by Anthony Barker)
