Gold, Trading Near Record, May Gain on Libyan Conflict, Europe Debt Crisis

Gold fluctuated near a record in New York as fighting in Libya, debt concerns in Europe and a nuclear crisis in Japan spurred demand for an alternative investment. Silver was near a 31-year high.

The coalition against Muammar Qaddafi is taking aim at his armored units, military facilities and supply lines after crippling his air force. Japan’s nuclear regulator said one reactor core at the damaged Fukushima Dai-Ichi power plant may be cracked and leaking radiation. Concern that Portugal may need a bailout helped gold reach a record $1,448.60 an ounce yesterday.

“There is just too much uncertainty at the moment and gold should hold near recent highs,”Andrey Kryuchenkov, an analyst at VTB Capital in London, said in a report. “Geopolitical concerns in addition to growing uncertainty over Portugal’s debt crisis supported bullion.”

Gold futures for April delivery rose $1.30, or 0.1 percent, to $1,436.20 an ounce at 7:57 a.m. on the Comex in New York. Prices gained as much as 0.2 percent and fell as much as 0.3 percent today and are up 1.4 percent this week. The metal for immediate delivery in London was up 0.4 percent at $1,436.19.

Bullion fell to $1,434 an ounce in the morning “fixing” in London, used by some mining companies to sell output, from $1,447 at yesterday’s afternoon fixing.

Portugal continued to rule out a bailout, which two officials with direct knowledge of the matter said may total between 50 billion euros ($71 billion) and 70 billion euros. Fitch Ratings and Standard & Poor’s yesterday downgraded the country.

NATO Command

The North Atlantic Treaty Organization agreed to take command of the Libya no-fly zone without assuming responsibility for air strikes against military targets. The revolt has evolved from the kind of popular uprising seen in Egypt and Tunisia into a civil war.

In Yemen, the political opposition to President Ali Abdullah Saleh announced plans for nationwide protests against the state of emergency passed by Saleh’s loyalists in parliament this week. Syria announced steps in response to protests, including a possible end to 48-year emergency rule that suspended most rights. Concern about oil supply from the region has pushed the fuel above $100 a barrel in New York.

“Throw ongoing problems within the Middle East and North Africa into the mix, plus an escalating oil price, and further debt problems in Europe, and you have the perfect scenario for further strong gold prices,” said Gavin Wendt, founding director with MineLife Pty.

Damaged Plant

Repair work at Japan’s Fukushima Dai-Ichi plant damaged after the March 11 earthquake and tsunami has been plagued by explosions, fires and leaks of toxic material. Two plant workers were hospitalized yesterday with radiation burns. Tokyo authorities were handing out bottled water after determining that tap water may be unsafe for babies.

Seventeen of 19 traders, investors and analysts surveyed by Bloomberg, or 89 percent, said bullion will rise next week. Two predicted lower prices.

Silver for May delivery in New York rose 0.6 percent to $37.615 an ounce after yesterday reaching $38.18, the highest price since February 1980. Futures that year reached a record $50.35.

Palladium for June delivery was little changed at $752.55 an ounce. Platinum for July delivery declined 0.5 percent to $1,756.20 an ounce.

(Source: http://www.bloomberg.com/news/2011-03-25/gold-may-climb-to-record-for-second-day-as-silver-trades-near-31-year-high.html)