Gold drops half a percent ahead of Libya’s peace plan (Reuters) (03-03-2011)

SINGAPORE – Gold lost half a percent on Thursday due to a peace plan proposal for Libya made by OPEC member, so as to end violent unrest in the country.

Spot gold fell as much as 0.7 percent and more than $11 from an intraday high of $1,436.15 at heel of the news. It was trading at $1,427.44 an ounce by 0626 GMT, down half a percent.

U.S. gold futures lost 0.7 percent at $1,428.20 while a key support level is seen around $1,420.

Gold's appeal could diminish if central banks start raising interest rates, which would ease some inflationary concerns. Higher interest rates would raise the opportunity cost of holding gold.

Spot silver rose to just 2 cents below the 31-year high of $34.96 an ounce hit on Wednesday, before dropping nearly 40 cents to $34.50.

Spot platinum fell 0.9 percent at $1,829.63, snapping a four-day winning streak.

U.S. private sector employers added more jobs than expected last month, while the Federal Reserve said economic activity slowly improved in the beginning of the year.

Source: Reuters