* Dollar retreats, oil stays near multi-year highs
* Fed policy tightening expected to lag other central banks
* iShares silver ETF holdings hit record
(Updates prices)
By Jan Harvey
LONDON, April 11 (Reuters) - Gold hit record highs on Monday
as the dollar fell on expectations the Federal Reserve will lag
other central banks in tightening monetary policy, though it
later retreated along with oil on signs a Libyan peace deal may
be struck.
Precious metals were boosted this year by elevated oil
prices and safe-haven demand after unrest swept the Middle East
and North Africa and concerns resurfaced over the debts of some
smaller euro zone economies, chiefly Portugal.
Spot gold <XAU=> rose as high as $1,476.21 an ounce and was
bid at $1,469.70 an ounce at 1135 GMT, against $1,472.70 late in
New York on Friday. Silver <XAG=> hit its highest since early
1980 at $41.93 and was later at $41.32 an ounce against $40.85.
"Looking across the board, over the last week there has been
investor interest in the metals," said Jeremy East, global head
of commodity derivatives trading at Standard Chartered, which
last week predicted gold could hit $2,100 an ounce by 2014 on
the back of dollar weakness and low interest rates.
Gold is better supported than silver, which has a dual role
as an investment vehicle and an industrial commodity, he said,
although silver has outperformed gold so far this year, with the
gold:silver ratio dropping to 28-year lows.
"Gold is definitely supported by the Portugal bailout and
the weakening dollar, but silver seems much more speculative,"
he said. "If gold pulls back $50, we would expect to see some
good physical demand coming in. Silver needs to do a lot more."
Holdings of the world's largest silver-backed
exchange-traded fund, New York's iShares Silver Trust <SLV>,
rose to a record 11,243 tonnes on Friday. []
The dollar eased against a basket of currencies, reaching a
session low soon after news of another earthquake in Japan. A
weaker dollar tends to benefit gold, as it makes dollar-priced
commodities cheaper for other currency holders. []
Analysts also expect other countries' central banks will be
quicker to mop up excess liquidity and raise interest rates than
the Fed, with the European Central Bank and China already
raising rates.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic showing the gold:silver ratio, click on:
http://r.reuters.com/jyx88r
For a graphic showing gold prices adjusted for inflation:
http://r.reuters.com/ren88r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
ACCOMMODATIVE POLICY
The U.S. economy is still not strong enough for the Fed to
start reversing its extremely accommodative monetary policy, Fed
official Janet Yellen said on Saturday. []
"Comments from Fed members, both voting and non-voting, in
recent weeks and over the weekend have only served to highlight
the lack of agreement on the direction of monetary policy," said
UBS analyst Edel Tully in a note.
"The gold community is granting a greater possibility to
further quantitative easing post-June, and the lack of synergy
among Fed officials only adds weight to these expectations. The
beginning of an economic soft spot has also underpinned gold."
Concerns remain over further political problems in the
United States after a potentially damaging government shutdown
was threatened late last week.
"With one crisis seemingly put to one side another
confrontation looms in the coming weeks between Democrats and
Republicans with respect to the raising of the debt ceiling,
which is currently set at an eye watering $14.25 trillion," said
CMC Markets analyst Michael Hewson. []
Oil prices, meanwhile, pulled back on Monday after the
African Union said Muammar Gaddafi had accepted a roadmap to end
the civil war in Libya, though they remain near multi-year
highs. [] []
Elsewhere, U.S. gold futures for June delivery <GCv1> eased
$3.10 an ounce to $1,471.00. Among other precious metals,
platinum <XPT=> was at $1,795.50 an ounce against $1,803.75,
while palladium <XPD=> was at $790.97 against $790.75.
(Reporting by Jan Harvey; Editing by Alison Birrane)
