Gold to the top amid Middle East unrest (Reuters) (01-03-2011)

SINGAPORE - Spot gold rose on Tuesday as escalating unrest in Libya and the Middle East supported safe-haven demand. Holdings though in the biggest gold-backed exchange-traded fund fell to the lowest level in more than nine months.

Spot gold edged up 0.3 percent at $1,414.66 an ounce by 0642 GMT, leading for a third straight day of gains. It had been moving in a narrow range of just below $6.

The most active U.S. gold futures contract edged down 0.4 percent at $1,415.40 while gold could drop 20 percent later this year and in 2012 as the global economy picks up and as speculators exit the market, according to the Australian Bureau of Agricultural and Resource Economics and Sciences.

Holdings in the SPDR Gold Trust dipped to the lowest since mid-May last year in a sign that investors may be switching to stocks and other assets, dealers said.

Spot gold has inched down half a percent so far this year, compared to a 5.6 percent climb in the Dow Jones Industrial Average.

Spot silver hit an intra-day high of $34.11 and eased to $34.08. It struck a 31-year high at $34.30 last week.

Brent crude rose above $112 a barrel on Tuesday as the ongoing unrest in the Middle East and North America threatened to further reduce crude supplies.

Source: Reuters