Gold rises in Europe

Gold prices rose in Europe on Monday, recovering some of last week's one percent losses, as the impact of an earthquake in Japan added to upward pressure on the metal, driving it back towards recent record highs. Gold was at $1,422.65 an ounce at 1504 GMT versus $1,417.70 late on Friday, within sight of the record $1,444.40 it hit last week. It fixed at $1,422.25 at 1500 GMT. US gold futures for April delivery rose $1.30 to $1,423.10.
Thousands in Japan have been killed or displaced by Friday's earthquake and subsequent tsunami. "Safe-haven buying clearly seems to pushing bullion higher, and (that) may be the case until Japan and the world quantify the financial losses due to this disaster," said Pradeep Unni, an analyst at Richcomm Global Services.
"Investment demand may see a surge in the coming sessions which could take gold to fresh record highs," he added. "The only doubt cast to this view is that Japanese retailers may sell gold to raise immediate cash." Rescue workers combed the region north of Tokyo for survivors and struggled to care for millions of people without power and water in what Prime Minister Naoto Kan has dubbed his country's worst crisis since World War Two.
Roads and rail, power and ports have been crippled across much of Japan's north-east and estimates of the cost of the multiple disasters have leapt to as much as $170 billion. Premiums for gold bars in Tokyo jumped to their highest since February at $1 an ounce versus spot London prices, from zero last week, dealers said.
Oil prices fell, stock markets slipped and the yen retreated from record highs against the dollar after the Bank of Japan announced a series of policy easing measures to shore up the economy in the wake of the disaster. Unrest in the Middle East and North Africa continued to spread, with Saudi Arabia sending troops into Bahrain on Monday to help put down weeks of protests by the Shia Muslim majority.
As Libyan leader Muammar Gaddafi's troops battled rebel fighters for control of the strategic oil town of Brega, France stepped up efforts to persuade world powers to impose a no-fly zone over the country. Violence which has spread from Egypt and Tunisia across the Middle East this year was a major factor driving gold to record highs, and precipitated a spike in oil prices.
"Japan is another risk element in a plethora of events which have been important in the minds of investors in the past quarter," said Deutsche Bank analyst Daniel Brebner. "You have the Middle East/North Africa situation, the peripheral eurozone debt issues which seem to be re-emerging, there are questions with respect to China raising interest rates near term, and there are municipal issues in the United States, particularly on debt."
"This is all creating an environment where there appears to be support for precious metals, and gold in particular." In Europe, analysts said they saw little reaction in the gold price from this weekend's agreement among European leaders to strengthen the euro zone bailout fund, a move designed to address the bloc's year-long debt crisis.
"From gold's perspective, Saturday's agreement represents a positive surprise that should help the euro but may in initial assessment present less immediate need for additional gold long exposure," said UBS in a note. Among other precious metals, silver was bid at $35.82 an ounce versus $35.83, platinum at $1,752 an ounce against $1,778.50 and palladium at $746.47 against $757.