By Nicholas Larkin

March 30 (Bloomberg) -- Gold gained for the first time in five days in New York as fighting in Libya and concern about European debt spurred demand for an alternative investment.

Libyan rebels’ westward advance on Sirte stalled under fire from Muammar Qaddafi’s troops. Standard & Poor’s yesterday cut credit ratings for Greece and Portugal. Gold futures reached a record $1,448.60 an ounce on March 24 as fighting in Libya, the Japanese nuclear crisis and concerns about European debt boosted demand for a protection of wealth.

“It is certainly the geopolitical factors which are still playing a role,” said Peter Fertig, owner of Quantitative Commodity Research Ltd. in Hainburg, Germany. “The situation in Libya is quite open and far from over.”

Gold futures for June delivery rose $6.40, or 0.5 percent, to $1,423.90 an ounce at 8:01 a.m. on the Comex in New York. Prices are little changed this quarter after gaining the previous nine quarters. The metal for immediate delivery in London was 0.3 percent higher at $1,422.80.

Pro-Qaddafi forces retook control of the oil port of Ras Lanuf, forcing the rebels to abandon their positions and flee east, as President Barack Obama said he may consider sending arms to the opposition forces. The fighting is the most violent yet seen in more than two months of popular uprisings across the Middle East and North Africa. Syrian President Bashar al-Assad will give an “important speech” after the country’s Cabinet stepped down yesterday, the state-run SANA news agency said.

The cost of insuring Portuguese government debt earlier today rose to a record, according to CMA prices, as speculation mounted the nation will be forced to restructure its borrowings.

Monetary Policy

Bullion yesterday traded near a one-week low on signs the U.S. economy is improving and amid speculation of tighter monetary policies. St. Louis Federal Reserve Bank President James Bullard yesterday said the central bank may need to trim debt purchases because the U.S. recovery has gained strength.

Gold has been “caught between potential rate hikes weighing upon prices, but also the ongoing geopolitical unrest supporting prices,” Suki Cooper, an analyst at Barclays Capital in New York, said in a report.

Silver for May delivery in New York rose 1.6 percent to $37.575 an ounce. It reached $38.18 on March 24, the highest level since February 1980, the year futures reached a record $50.35. Prices are up 21 percent this year, heading for a ninth straight quarterly advance, the best run of gains since at least 1975.

An ounce of gold bought as little as 37.73 ounces of silver in London today, the lowest level since October 1983, data compiled by Bloomberg show.

Silver industrial demand may climb to a record 665.9 million ounces in 2015, from 487.4 million ounces last year, the Silver Institute and researcher GFMS Ltd. said in a report this week. Silver is used more in industry than gold.

Palladium for June delivery was up 0.3 percent at $755.55 an ounce, cutting its quarterly loss to 5.9 percent. Platinum for July delivery gained 0.5 percent to $1,752.80 an ounce. Prices are down 1.4 percent this quarter.

--Editors: John Deane, Dan Weeks

To contact the reporter on this story: Nicholas Larkin in London at nlarkin1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net.

Source: http://www.businessweek.com/news/2011-03-30/gold-gains-in-new-york-on-libya-fighting-european-debt-concern.html