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Libya unrest keeps gold above $1,400

Libya unrest keeps gold above $1,400
Sat 4:01 pm by Sergei Balashov 

Libya unrest keeps gold above $1,400

Gold was in demand this week amid the continuing unrest in the greater Middle East, which boosted demand for safe harbour assets.

The yellow metal peaked at US$1,418/oz when violence in Libya intensified and it was reported that the country’s long time ruler Muammar Gaddafi ordered his security forces to sabotage oil facilities, driving oil prices to two year highs.

Saudi Arabia has to step in, indicating it was prepared to raise production to make up for any supply shortfalls caused by the situation in Libya.

The news brought some relief to the markets, however, the crisis appears to be far from over and traders fear that the situation could turn to the worse. At the end of the week, a former minister of the Libyan government told Al-Jazeera that Gaddafi had biological and chemical weapons and could use them against protesters without much hesitation in a desperate bid to stay in power.

Gold, which is seen as a safe haven asset and an inflation hedge, remains under pressure from expectations of a price decline once the situation in the Middle East and North African calms down.

Gold last traded at US$1,409/oz, up from US$1,389/oz a week ago.

Silver advanced from US$32.66/oz to US$33.38/oz, while platinum declined from US$1,832/oz to US$1,805/oz.

Mining companies were headed in different directions this week.

Shares in African Barrick Gold (LON:ABG) surged from 571 pence to 590 pence, while fellow gold producer Randgold Resources (LON:RRS) declined from 5,035 pence to 5,020 pence.

Silver miner Fresnillo (LON:FRES) rose from 1,507 pence to 1,576 pence and platinum miner Lonmin (LON:LMI) fell from 1,853 pence to 1,829 pence.