Gold gains in Europe

Gold rose on Friday on lingering concerns about the economy and oil prices despite Libya's announcement of a cease-fire, while investors looked to an intervention in the yen as a move that could calm markets. Bullion remained underpinned by market uncertainty as France said it was still cautious about the cease-fire, and with Britain on Friday preparing warplanes for action.
Gold was at $1,420.10 an ounce at 1536 GMT from $1,402.40 late in New York on Thursday. Earlier the metal was little changed after China's central bank raised lenders' required reserves by 50 basis points. Muammar Gaddafi's government declared a cease-fire to protect civilians and comply with a United Nations resolution passed overnight, Libyan Foreign Minister Moussa Koussa said.
The metal earlier hit a session high of $1,423.70 an ounce, supported by the U. N.'s approval of military action to contain Gaddafi, while unrest in Bahrain and Yemen has also unnerved investors. "If that (the cease-fire) actually stands and is sustained, then concerns soften in regard to the wider implications for the whole region," said Carl Firman, an analyst at Virtual Metals.
"If the MENA (Middle East and North Africa) region stabilises ... we'll see confidence return," he added. Also curbing investors' flight to gold as a safe haven from inflationary pressures, Brent crude oil prices reversed earlier gains to trade below $115 an ounce after the cease-fire announcement. A weaker US dollar against a basket of currencies also supported dollar-priced gold.
US investment bank Goldman Sachs forecast, however, gold prices would rally to a new high of $1,480 an ounce in three months on declining US real interest rates. Gold hit a record $1,444.40 on March 7. Japan's battle with a nuclear crisis after Friday's earthquake and tsunami has also shaken confidence in global markets this week. "The uncertainty across the different global centres is still there, and that should support precious metals," said Saxo Bank analyst Ole Hansen.
In the wake of the crisis, Japan bought billions of dollars to restrain a soaring yen, and traders reported intervention by European central banks, kicking off joint action by the world's richest nations to calm markets. In recent sessions risk aversion mounted to such heights that even gold, traditionally a safe haven from risk, was no exception to the broad sell-off as investors sold the metal to cover losses elsewhere. Joining the rally, spot silver was at $35.04 an ounce from $34.18, but it came off a session high of $35.36. Platinum was at $1,714.99 an ounce from $1,697.49 and palladium traded at $729.00 an ounce from $704.50.