SINGAPORE, Feb 18 (Reuters) - Gold was steady near its
strongest level in five weeks on Friday, heading for its best
weekly gain since early January, on inflation fears sparked by
rising oil and food prices as well as flaring Middle East
tensions.	

 As anti-government protests rock the Middle East, the White
House, U.S. Secretary of State Hillary Clinton and the Pentagon
all urged Bahrain's leaders to pull back after police attacked
demonstrators in the Gulf kingdom's worst violence in decades.
 	

 Spot gold added 30 cents to $1,383.60 an ounce by
0327 GMT, having hit its highest level since Jan. 13 at
$1,384.85 on Thursday after data showed U.S. core consumer
prices rose 0.2 percent that month, the fastest pace in more
than a year. Bullion was below a lifetime high around $1,430 hit
in December.	

 " As we see more prices in the grains move higher, we are
convinced that people are saying: well OK, what's the store of
value now? So they are moving to gold as a result of that,"  said
Jonathan Barratt, managing director of Commodity Broking
Services in Melbourne.    	

 " Given what's happening in the Middle East, given what's
happening with foodstuff, the market remains concerned over
inflationary spike." 	

 France's agriculture minister warned the United Nations that
food riots like those of three years ago could break out around
the world because of steep rises in food prices. In 2008, riots
broke out in countries as far apart as Egypt, Cameroon and
Haiti. 	

 The International Monetary Fund will warn G20 finance
ministers this weekend of growing risks to the world economy
from surging food prices and public finances while also
advocating a somewhat weaker dollar. 	

 According to technical charts, gold -- which investors turn
to as a hedge against inflation -- may end an exhausted rally at
around $1,387 per ounce as a rising wedge is contracting to a
point, says Wang Tao, a Reuters market analyst for commodities  and energy technical.	

U.S. gold futures for April hardly changed at
$1,384.6 an ounce.	

 Silver held near its highest level since 1980 on
signs that investment demand was picking up.     Holdings in the
world's largest silver-backed exchange-traded fund, iShares
Silver Trust , edged up to 10,438.56 tonnes by Feb 17 from
10,411.23 tonnes on Feb 14.    	

 Brent crude oil rose towards $103 a barrel on Friday, as
unrest spreading across the Middle East fanned fears of a supply
disruption in the major oil-producing region. U.S. crude edged
lower, but held above $86 a barrel, after jumping more than
$1.00 the previous day. 	

 Jewellers deserted the physical sector because of higher
prices, but dealers noted safe-haven buying related to the
tension in the Middle East. 	

 " I think no physical buyers want to buy at these levels.
There are concerns about inflation in China too, but I think the
Chinese are buying gold locally and not from the Hong Kong
market. It seems there's enough supply there,"  said a dealer in
Hong Kong.	

 " I think sentiment is a bit mixed. It may want to try $1,400
again but I think physical buyers will only appear at the lower
end. The market is mainly driven by speculators."       	

 China's Ministry of Commerce has asked other ministries to
consider potential cuts in import taxes on a range of goods
including food, two sources said on  Thursday, in a move seen
aimed at taming rising inflation. 	

In other markets, shares in Asia's developed markets
succumbed to a bout of profit taking on Friday after posting
solid gains this week while the Swiss franc benefited from
safe-haven bids due to mounting tensions in the Middle East.  

LONDON, Feb 17 (Reuters) - Gold rose for a fourth day in a
row on Thursday in its strongest run since September, helped by
safe-haven demand as unrest spread across the Middle East, while
the dollar remained under mild pressure.

 Investors are closely watching the growing turmoil in the
Middle East and North Africa, especially after police in Bahrain
attacked demonstrators camped out in the capital, killing three,
and riots broke out in Libya. 

 Gold was set for its strongest weekly performance since the
start of the year as tensions flared, boosting other perceived
safe-haven assets like the Swiss franc CHF=, which rose 0.3
percent on the day and U.S. Treasuries US10YT=RR.

 Spot gold XAU= rose 0.4 percent to $1,379.00 an ounce by
1255 GMT, after hitting a one-month high of $1,381.84 in the
previous session.

 U.S. gold futures GCJ1 also rose 0.2 percent to $1,378.10.

 Also in focus was U.S. inflation data for January, due later
in the day, which is expected to show consumer prices picked up
at a faster pace last month than they did at the same time last
year. ECONUS

 " The market is very jittery because you have civil unrest
across the entire Middle East,"  said VTB Capital analyst Andrey
Kryuchenkov.

 " The momentum is bullish, the uptrend is intact and there
probably is some inflation buying ... but today the key is the
inflation data,"  he said.

 The government will release its January CPI report at 1330
GMT after its core rate on producer prices saw their biggest
monthly rise since October 2008. 

 The U.S. government also auctions $9 billion in new 30-year
inflation-linked bonds, which could offer some gauge of investor
expectations for inflation.

 The dollar index .DXY was largely unchanged on the day, as
the Swiss franc gained from safe-haven flows, yet the euro
EUR= came under pressure from ongoing concern over the
region's finances and debt burden. [FRX/]

 The minutes of the Federal Reserve's most recent policy
meeting showed the central bank is more confident in the
economic outlook but still unhappy with the recovery in the job
market. 

 Physical demand from Asia has been muted this week and may
drag on gold as the spot price continues to climb.

 Yet the longer-term outlook remains bullish, according to
the World Gold Council's Gold Demand Trends report, released on
Thursday, which expected Indian and Chinese consumption to
remain robust.

 Premiums for gold bars in Hong Kong fell below $2, from more
than $3 an ounce over London prices, after supply tightness
before the Lunar New Year holiday had eased, dealers said.

 In other precious metals, silver XAG= rose 0.3 percent to
$30.73 an ounce, while the platinum group metals came under mild
pressure, echoing declines in other industrial metals. [MET/L]

 Spot palladium XPD= reversed earlier gains to fall 0.2
percent to $835.97 an ounce, while platinum XPT= eased 0.1
percent to $1,825.60.

 (Additional reporting by Rujun Shen in Singapore  Editing by
Alison Birrane)

By Rujun Shen	

 SINGAPORE, Feb 17 (Reuters) - Spot gold was a tad stronger
on Thursday, on course for a fourth straight day of gains, as
escalating tensions in the Middle East buoyed sentiment, though
physical demand remained lackluster.	

 Investors are closely watching the development of tensions
in the Middle East and North Africa, especially after Israel
alleged Iranian warships were trying to traverse the Suez Canal
and riots broke out in Libya.  	

 But a lackluster physical market would weigh on the
momentum, as buyers shy away after prices have gone up about
$70, or 5 percent, from end of January.	

 " There's not much activity on the physical market, as prices
have gone up quite a bit from before the Lunar New Year,"  said a
Hong Kong-based dealer.	

 " In Asia, buyers are a bit reluctant to get in now, because
they think prices are too high." 	

 Premium for gold bar in Hong Kong had dropped to below $2,
from more than $3 an ounce over London prices, after supply
tightness before the Lunar New Year holiday has eased, dealers
said.	

 Spot gold gained 0.2 percent at $1,377 an ounce by
0328 GMT, after hitting a one-month high of $1,381.84 in the
previous session.	

 U.S. gold futures also rose by 0.2 percent at
$1,377.50.	

 A bullish target range of $1,385-$1,390 remains unchanged
for spot gold as a rising wedge is intact, said Reuters  market analyst Wang Tao. 	

 " Some investors have been preoccupied with inflationary
concerns,"  said Ong Yi Ling, an analyst at Phillip Futures, " In
the event that we see a downtick in inflation, gold prices could
come under some pressure." 	

 Data on Wednesday showed that U.S. core wholesale prices
rose in January at their fastest in more than two years, raising
some concerns about inflation, but economists said the recovery
was too weak for a big spike in consumer prices. 	

 The U.S. Federal Reserve officials raised their forecasts
for economic growth last month but remained unhappy with the job
market's recovery, according to minutes of the Fed's policy
meeting in late January. 	

 The brightened economic prospects have lured some investors
to riskier assets such as stocks and weakened gold's appeal.	

 Holdings in the SPDR Gold Trust , the world's largest
gold-backed exchange-traded fund, remained unchanged at its
nine-month low of 1,224.008 tonnes. 	

 Spot palladium gained nearly half a percent at
$841.72 an ounce, just below a decade-high of $847 hit on Feb
15.	

 	
 Precious metals prices 0328 GMT
  Metal             Last    Change  Pct chg  YTD pct chg  Volume
  Spot Gold        1377.00    2.80   +0.20     -2.99
  Spot Silver        30.66    0.03   +0.10     -0.65


  

on Wednesday, after rising for two consecutive sessions with aid
from inflation concerns, while the SPDR Gold Trust holdings fell
to a nine-month low, as investors continue to watch the
development of the Middle East unrest. 	

 FUNDAMENTALS	

 * Spot gold edged down 0.1 percent to $1,371.30 an
ounce by 0044 GMT. It hit a four-week high of $1,376.50 in the
previous session.	

 * U.S. gold futures inched down 0.2 percent to
1,372.10.	

 * Inflation in Britain jumped to twice the Bank of England's
target in January, prompting BoE Governor Mervyn King to
acknowledge that interest rates might rise more rapidly than
economists had expected. 	

 * Growth in sales at U.S. retailers slowed in January,
partly due to harsh winter weather across much of the country,
but the trend remained supportive of an acceleration in the
economy. 	

 * Unrest in the Middle East continued to unfold, with
protesters clashing with loyalists in Yemen and demonstrators
camping out in Bahrain's capital demanding political reform.

 * Holdings in the SPDR Gold Trust , the world's largest
gold-backed exchange-traded fund, slipped to 1,224.008 tonnes by
Feb 15, its lowest in nearly nine months. 	

 * Spot palladium was little changed at $835.75, after
hitting a 10-year high of $847 in the previous session.	
MARKET NEWS	
 *  Market breadth weakened and a prominent investor
retreated from bullish positions as a vulnerable U.S. stock
market slipped off 2-1/2-year highs on Tuesday. 	
 *  The dollar index held steady on Wednesday, and
looked well placed to test the ceiling of a long-held range
against the yen after hitting an eight-week high.