Gold eases below $1,430 in European trade

Gold eased below $1,430 an ounce on Tuesday, falling further away from the previous day's record high after crude oil prices slid, thereby alleviating some of the concern about a potential oil shock to the global economy. Gold has risen 8.5 percent in the last six weeks, as clashes in Libya and turbulence across the Arab world have encouraged investors to seek a safe-haven in which to put their capital.
Yet the 18-percent rise in the oil price in this time has raised investor expectations for inflation at a time when central banks around the world prepare to withdraw the ultra-loose monetary policies in place since the financial crisis, which would ultimately be detrimental to gold. Spot gold was bid at $1,427.50 an ounce at 1511 GMT, against $1,430.74 late in New York on Monday. US gold futures for April delivery eased $6.60 to $1,428.20.
Gold fixed at $1,426.25 an ounce versus $1,435.00. "Gold is now weighing its options between the continued flight to safety on the one hand and on the other hand, the likely rate increase in Europe as well," said Barclays Capital analyst Suki Cooper.
"At the moment, it is balanced between the two, but I think if we see a heightening of geopolitical tensions, we could see gold extend its gains," she said, adding her average forecast for the gold price in the first quarter was $1,390 and $1,490 for the second quarter of the year.
Gold hit a record $1,444.40 an ounce and oil rallied on Monday after troops loyal to Libyan leader Muammar Gaddafi launched a counter-offensive against rebels protesting against his 41-year rule, fuelling fears Libya was facing civil war. As gold is often traded as part of a commodities basket which also includes oil, both tend to move in line and the correlation between the two reached its strongest in a month.
Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, rose for the first time since February 1 on Monday, by 6.7 tonnes. Meanwhile holdings of the largest silver ETF, the iShares Silver Trust, rose to two-month highs of 10,898.14 tonnes, climbing 103.25 tonnes, their largest one-day rise since February 23. Silver was fell 0.3 percent to $35.75 an ounce, while platinum was down 0.8 percent at $1,802.70 an ounce against $1,816.49, while palladium was down 0.4 percent at $782.72.