Gold slides on possible ease to Libyan tensions

Gold slides on possible peace plan proposed by the Venezuelan President Hugo Chavez for Libya which may ease tensions between the Libyan leader Qaddafi and rebels.

The ongoing change and jittery situation that started in Tunisia at the beginning of the current year and spread to other countries in the region helped gold to climb to new record high yesterday when it touched $1440.10 an ounce.

Yet, the aggravating situation in Libya may come to an end if the plan, which is supported by the Arab League, which involves sending representatives from several countries to Libya, succeeded in reaching a middle solution.

If the problem was solved in Libya and protests does not spread to other countries, gold may drop as safety demand would be reduced.

The previous session, gold added $2.50 or 0.17% to close at $1434.25, while gold price was setin London at $1435.50 per ounce declining from $1430.50 during the AM fixing.

Yet, gold failed to remain above resistance at $1430 levels, the previous high recorded in December, as it is currently trading at $1428.76 after recording a high of $1436.16 and a low of $1422.57.

Also, the high price touched yesterday and the movement of gold in an overbought area, as depicted by the Stochastic Oscillator momentum indicator on the daily charts, is encouraging some sell off to generate profit.

On the other hand, oil, the main supporter to gold over the recent period, fell today to $100.36 a barrel after recording a high of $102.92.

Among other precious metals, platinum edged down to $1840.00 from the day's opening of $1849.70, palladium plunged to $811.00 from $821.00 and silver plummeted to $34.56 from $34.84, as of 08:20 GMT.

In the Forex market, the US dollar is little changed ahead of non-manufacturing and jobless claims in the United States and the euro movement also was within narrow range before the announcement of March's rate decision.

Manufacturing data released this week in major economies gave hopes that recovery will strengthen in the first quarter, where services data is scheduled to be released later in the day to give a full picture on the two key sectors in most major economies.