Gold steady on Middle East crisis

Reuters , Wednesday 23 Mar 2011

Gold prices steadied on Wednesday, as escalating unrest in the Middle East and North Africa underpinned safe-haven demand, but a modest rebound in the dollar could weigh on the sentiment as fears on Japan's nuclear crisis eased.

The troubles in the Middle East turned increasingly violent with Syrian troops opening fire on protesters and Yemen's president warning that the country would slip into civil war if he was forced to quit.

"Gold is still taking its cue from the situation in the Middle East," said Ong Yi Ling, an analyst at Phillip Futures, adding that it could increase safe-haven flows into the precious metal.

Oil prices have moved in tandem with gold since the Middle East tensions broke out at the end of January. Lofty oil prices have stoked worries of inflation down the road, adding to gold's allure as an inflation hedge.

Spot gold was little changed at US$1,428.50 an ounce by 0656 GMT. US gold futures was nearly flat at $1,428.80.

Bullion has been moving in a narrow range of $4 in the past two sessions, lacking momentum for a further rise on easing fears over Japan's nuclear crisis, even though the battle to contain the problem was ongoing and concerns on food contamination are rising.

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