COMMODITIES-Gold up on Italy election worries; oil reverses rally

* Biggest gold rally since Oct after official trade session
* Oil reverses rally after close on fears over Italy polls
* Gas, silver run-up too; sugar, cocoa and wheat down

By Barani Krishnan
NEW YORK, Feb 25 (Reuters) - Gold gained its most in nearly
five months on Monday, with safe-haven buying lifting the
precious metal in post-session electronic trade as U.S. stocks
slid and as oil reversed an early rally.
In base metals, copper rebounded from a six-day losing
streak, although gains were kept in check by slower growth in
demand and manufacturing activity in top consumer China.
Among crops, raw sugar fell after a global supply glut
checked an early rally, and arabica coffee retreated from a
two-week high. Wheat fell to an 8-month low as wetter U.S.
Plains weather boosted harvest prospects.
Thomson Reuters-Jefferies CRB index settled up
slightly. Although it had risen marginally on Friday as well,
the index had tumbled 1.7 percent through last week -- marking
its sharpest weekly decline in nearly four months.
Eight of the 19 commodities tracked by the CRB settled up.
Aside from gold's rise of more than 1 percent, two other
commodities led the CRB's advance: natural gas and silver.
Gas surged nearly 4 percent on expectations that chilly U.S.
weather forecasts for most of the next two weeks would increase
heating demand. Silver rose 2 percent, rallying on the coattails
of gold.

GOLD BOUNCES TO NEAR $1,600
Gold rose to near $1,600 an ounce after conflicting early
forecasts of Italy's election raised fears a divided parliament
in the debt-laden country could hamper the euro zone's
stability. The S&P 500 index for U.S. stocks fell almost
2 percent on the news.
Recent comments by top Federal Reserve officials suggesting
the U.S. central bank could reduce or halt its asset buying has
hit demand for gold. Investors are focusing on Federal Reserve
Chairman Ben Bernanke's semiannual testimony to Congress on
Wednesday for hopes of more economic stimulus.
Overall confidence in gold has been fragile lately. The
total volume of bullion held by investors in SPDR Gold Trust
- the world's largest exchange-traded fund (ETF) for gold
-- fell 42.3 tonnes to 1,280.67 tonnes last week in the largest
weekly outflow since August 2011.
"Clearly, gold could be going up ahead of the Bernanke
testimony tomorrow," said Axel Merk, chief investment officer of
Merk Funds which manages $630 million in mutual fund assets.
"And gold has had quite a wash-out, so on a relative basis it is
more attractively priced than other assets."
U.S. gold futures for April delivery settled up
$13.80 at $1,586.60, with trading volume in line with their
250-day average, preliminary Reuters data showed.
In after-hours trade, the contract rallied to $1,596.50,
gaining 1.4 percent, for the largest one-day run-up in gold
futures since Oct. 1.

BRENT CRUDE OIL DOWN TO AROUND $113
Oil prices slipped with other financial markets after exit
polls from Italy's national election indicated the country could
be heading for political stalemate, sparking fears of
instability in the euro zone's third largest economy.
Oil's benchmark Brent crude rose as much as 1.5
percent in early trade to a high of $115.87 a barrel, before
settling just 34 cents up at $114.44. In post-settlement trade,
it fell to as low as $113.31.
U.S. crude slipped to $92.07 a barrel in New York
after finishing at $93.13 during the official session.

Prices at 5:18 p.m. EST (2217 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US crude 92.18 -0.95 -1.0% 0.4%
Brent crude 113.51 -0.59 -0.5% 2.2%
Natural gas 3.414 0.123 3.7% 1.9%

US gold 1586.20 13.80 0.9% -5.3%
Gold 1593.64 -0.22 0.0% -4.8%
US Copper 354.30 1.00 0.3% -3.0%
LME Copper 7836.00 35.00 0.4% -1.2%
Dollar 81.791 0.309 0.4% 6.5%

US corn 693.50 3.25 0.5% -0.7%
US soybeans 1451.25 -10.00 -0.7% 2.3%
US wheat 699.25 -15.75 -2.2% -10.1%

US Coffee 142.60 -0.50 -0.3% -0.8%
US Cocoa 2144.00 -17.00 -0.8% -4.1%
US Sugar 18.01 -0.23 -1.3% -7.7%

US silver 28.987 0.527 1.9% -4.1%
US platinum 1620.70 13.30 0.8% 5.3%
US palladium 749.05 13.75 1.9% 6.5%

Oil prices rose on Friday after a strong reading for German
business morale and coffee and sugar rallied too, helping a
broad commodities index end up the first time in nine sessions.
On a weekly basis, though,

The Thomson Reuters-Jefferies CRB index had its
biggest tumble in nearly four months after accounting for sharp
losses from two sessions this week.
The weekly slump came as copper prices plumbed two-month
lows on fresh worries over Europe's banks despite the bullish
German data that boosted oil.
U.S. soybeans closed lower as players took profit on an
early rally fueled by strong Chinese buying and a Brazil port
strike that stalled grains shipments there.
And while raw sugar and coffee's premium grade
arabica rallied more than many other commodities, traders
cautioned that excess supplies could weigh on their prices
again.
"The only thing that can drive prices higher from here would
be maybe macro sentiment. We are not expecting this to come from
fundamentals," Andrey Kryuchenkov, an analyst at Moscow's VTB
Capital, said in a comment about sugar.
After sliding steadily for eight sessions, the CRB settled
up 0.2 percent. Twelve of the 19 markets tracked by the
commodities bellwether rose, with natural gas, nickel, gasoline,
raw sugar and arabica coffee gaining more than 1 percent each.
For the week, CRB ended down 1.7 percent, its sharpest slide
since the week ending Oct. 26.
Commodity markets started 2013 strongly, with the CRB rising
3 percent in January on signs of better economic recovery in the
United States, Europe and China. But uneven business and growth
data in the past two weeks raised market jitters, forcing the
CRB to close lower on Feb. 11 through Feb. 21.

OIL TICKS UP WITH STOCKS
In Friday's session, crude oil followed equity markets
higher after data showed Germany's business morale grew at its
fastest pace in over two years in February. Wall Street's key
stocks index, the S&P500 , was up 0.7 percent by 3.30 p.m.
ET (2030GMT), rising for the first time in three sessions.

Oil's benchmark Brent crude in London settled at
$114.10, up 0.5 percent on the day and down 3 percent on the
week. U.S. crude finished at $93.13, up 0.3 percent on
the session and down 2.8 percent on the week.
The selloff in oil earlier this week came after rumors on
Wednesday that a commodities hedge fund was in trouble and
liquidating positions. It accelerated on speculation the U.S.
Federal Reserve may end its bond-buying program, which has
provided liquidity to financial markets, sooner than previously
thought.
Copper slipped to its lowest level in 2 months and showed
its biggest weekly loss in 14 months after the European Central
Bank announced crisis loan repayments by euro zone banks at
levels far below market expectations.
Three-month copper in London closed at $7,805 a
tonne, down from Thursday's close of $7,860.
Copper, used in power and construction, fell 5 percent on
the week for its biggest weekly fall since mid-December 2011. On
Thursday, it suffered its biggest one-day slide of 2013.

Prices at 3:23 p.m. EST (2023 GMT)
LAST/ NET PCT YTD
CLOSE CHG CHG CHG
US crude 93.28 0.44 0.5% 1.6%
Brent crude 114.20 0.68 0.6% 2.8%
Natural gas 3.291 0.045 1.4% -1.8%

US gold 1572.40 -5.80 -0.4% -6.2%
Gold 1575.81 0.15 0.0% -5.9%
US Copper 353.30 -2.00 -0.6% -3.3%
LME Copper 7801.00 -60.00 -0.8% -1.6%
Dollar 81.454 -0.007 0.0% 6.1%

US corn 690.25 -0.50 -0.1% -1.1%
US soybeans 1461.25 -26.50 -1.8% 3.0%
US wheat 715.00 -6.25 -0.9% -8.1%

US Coffee 143.10 1.35 1.0% -0.5%
US Cocoa 2161.00 18.00 0.8% -3.4%
US Sugar 18.24 0.12 0.7% -6.5%

US silver 28.460 -0.239 -0.8% -5.8%
US platinum 1607.40 -12.60 -0.8% 4.5%
US palladium 735.30 1.70 0.2% 4.5%