March 1 (Bloomberg) -- Gold advanced, extending the best monthly gain since April, as violence in Libya and other states in the Middle East spurs investor demand for precious metals as a protector of wealth. Immediate-delivery bullion increased 0.2 percent to $1,414.70 an ounce at 2:20 p.m. in Singapore after a 5.9 percent gain last month. April-delivery metal in New York climbed 0.4 percent to $1,415.10. “Headlines in the Middle East-North Africa region should continue to influence investor participation in precious-metal markets,” said Marc Ground, an analyst at Standard Bank Plc, wrote in a note to clients. The U.S. and European nations solidified their support for Libya’s opposition, promising humanitarian aid and planning a no-fly zone as leader Muammar Qaddafi suggested the U.S. wants to occupy the country. U.S. naval and air units were being repositioned in the Mediterranean, and the European Union yesterday imposed an arms embargo and other sanctions. Gold for immediate delivery rallied 30 percent last year, touching an all-time high of $1,431.25 an ounce in December, as investors sought to preserve their wealth against currency debasement and rising inflation. Hedge funds boosted bullish bets on gold to the highest level since December, when the precious metal was headed to its record. Managed-money funds held net-long positions, or wagers on rising prices, totaling 182,739 futures and options contracts on the Comex as of Feb. 22, up 14 percent from a week earlier, U.S. Commodity Futures Trading Commission data showed last week. Chinese Demand Gold prices may also be supported by rising Chinese demand, Eugen Weinberg, the Frankfurt-based head of commodity research at Commerzbank AG, wrote in a note to clients. China imported more than 300 metric tons of gold last year, People’s Bank of China Vice Governor Yi Gang said on Feb. 26 in Beijing. “As gold demand is steadily increasing in China and domestic production cannot keep pace, China is likely to import high volumes,” Weinberg said. “This should support the price.” China is the world’s biggest gold miner. Gold may average $1,320 in 2011, 8 percent more than last year, because of investment demand driven by risks linked to global economic growth and fiscal stability, an Australian government agency said in a report today. The price may peak this year before declining, in real terms, to average about $975 an ounce in 2013, and then increase to $1,064 by 2016, according to the Australian Bureau of Agricultural and Resource Economics and Sciences. The appeal of the metal may weaken in the second half and in 2012 if the U.S. economy improves and the possibility of monetary tightening increases, it said. So-called real terms are prices adjusted for changes in inflation. Palladium, Platinum Palladium, which fell with industrial metals on the Middle East turmoil and renewed tightening in China’s bank reserve requirements, may rebound, said Wilson David, a London-based analyst at Societe Generale SA, France’s second-largest bank. “Palladium’s fundamentals outshine those of platinum,” David wrote in a note yesterday. “We expect palladium to have a good 10 percent upside potential this year from current levels just below $800.” The metal ended yesterday at $797.50 an ounce. Palladium for immediate delivery was little changed at $798 an ounce, down 7.5 percent from a decade high of $862.25 reached on Feb. 21. Platinum for immediate delivery was little changed at $1,808.85 an ounce. Palladium climbed 83 percent in the past year, outpacing platinum’s 17 percent gain, as Chinese auto sales boosted demand for the metal used in pollution-control devices. Silver, which climbed to $34.3187 an ounce on Feb. 22, the highest price since 1980, gained 0.7 percent to $34.1172. --Editors: Matthew Oakley, Ravil Shirodkar To contact the reporter on this story: Kyoungwha Kim in Singapore at kkim19@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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