Spot silver hit a 31-year high, while gold traded less than half a percent from a record high struck this week, as tensions in the Middle East underpinned safe-haven demand and surging oil prices helped. With Libya on the edge of a civil war, protesters took to the street in Yemen, Iran and Oman and clashed with government forces. Fears of spreading unrest in the region sent oil surging back toward last week's two-year highs. "If the contagion gets a little bit out of hand in Saudi Arabia or Iran, the results are not positive for equities and not positive for inflation. It's an event that everyone is trying to avoid," Jonathan Barratt, managing director of Commodity Broking Services. Spot silver struck $34.74 an ounce, its highest since early 1980. It was trading at $34.46 at 0637 GMT. U.S. silver futures rose to $34.74, and weakened a bit to $34.49. Spot gold hit an intra-day high of $1,434.45, just 20 cents below the record hit in the previous session. It had since eased to $1,428.94. Key support level is seen at $1,420 to $1,425, while charts suggest a rally toward $1,450 may be on the cards in the near term, according to Reuters analyst Wang Tao. "We may be another new high in the very near future, because the recent events have triggered another round of buying interest and the situation in the Middle East and North Africa is unlikely to stabilize very soon," said a Hong Kong-based trader. The positive view on bullion was shared by the scrap market where sales have slowed, anticipating higher prices. The gold-silver ration, used to measure how many ounces of silver is needed to buy an ounce of gold, fell to a 13-year low of 41.33 earlier in the day. Due to silver's double identity as an industrial and precious metal, it could benefit from safe haven interest spilling out from gold but also take a hit if economic prospects are dampened. "The same rational we apply to gold going up could stop silver from going higher," said Barratt. "We should start seeing the gold-silver ratio move in favor of gold." The fear that rising oil prices could hurt the global economic growth has driven up safe-haven demand for gold, but the U.S. Federal Reserve Chairman Ben Bernanke said a surge in oil prices is unlikely to hurt the U.S. economy unless it is sustained. The euro fell slightly on Wednesday after yet again failing to break through a key resistance level, helping lift the dollar off a 3- month low against a basket of currencies.
