NEW YORK (Reuters) - Gold rose for a fourth day on Monday, buoyed by a weaker dollar, rising oil prices and investor jitters surrounding air strikes by Western powers on Libya and Japan's struggle to avert nuclear disaster.
Gold trimmed early gains, following oil, but the metal stayed within a whisker of its record $1,444.40 an ounce set on March 7. A 1 percent rise in oil prices was enough to stoke inflation worries that helped keep gold aloft, analysts said.
Silver soared nearly 3 percent on strong industrial demand and near-term supply tightness, more than recouping last week's sharp losses.
"Tensions in Libya are prompting people to move money out of dollar-based assets and going for the safe play, which is buying gold and silver, as both are benefiting in a really big way today," said Zachary Oxman, managing director of TrendMax Futures.
Gold rose 0.6 percent to $1,427.95 an ounce by 3:39 p.m. EDT (8:39 p.m. GMT), while most-active U.S. April futures settled up 0.7 percent at $1,426.40.
Spot silver climbed 3.2 percent to $36.16 an ounce, within striking distance to its 31-year high of $36.70, making it the top gainer in the precious metals complex.
Reflecting bullishness among silver producers, Primero Mining Corp (P.TO) said it bought call options at an average strike price of $39 to cover its silver sales agreement to another miner, Silver Wheaton.
Total COMEX futures turnover was about 15 percent below its 30-day average and Friday's volume. U.S. futures volume has been weaker than usual after a spike following last Tuesday's sharp downward move.
U.S. Treasuries prices fell as progress in solving Japan's nuclear crisis reduced safe-haven demand. A 1.5 percent rally in U.S. stocks took some steam out of gold's rise.
Gold has gained on rising geopolitical tensions after a series of U.N.-authorized Western air strikes against Libya's Muammar Gaddafi, which Russian Prime Minister Vladimir Putin said resembled "medieval calls for crusades.
"You can't deny the escalating Middle East problems and the oil price are all supportive factors, but I wonder whether the big jump (in the gold price) is more weaker dollar-related," said Credit Agricole analyst Robin Bhar.
"It's all contributing to the safe-haven bid, and this week is going to be important ... geopolitical risk factors are uppermost in people's minds," Bhar said.
The dollar fell against a basket of major currencies .DXY to its lowest in 15 months, under pressure from the view that U.S. interest rates would not rise any time soon compared to other major economies such as the euro zone.
Gold's traditional negative correlation to the dollar has strengthened since the Japanese earthquake struck 10 days ago. Over the longer term, however, gold's link with the dollar could be erratic, traders said.
Adam Hewison, president of MarketClub.com, said his technical models indicated gold could remain in a trading range as it builds up energy for its next upward move.
Bullion will likely face technical resistance in the $1,335-$1,440 area, the daily close when the metal surged to an intraday record on March 7, he said.
Among platinum group metals, spot platinum gained 1.4 percent to $1,742.24.
Spot palladium rose 1.9 percent at $741.72 an ounce, but is set for a near-8 percent decline this quarter, having come under pressure from investors concerned about the impact of the Japanese earthquake and soaring energy prices on the broader economy.
On Tuesday, the market will watch the U.S. Federal Housing Finance Agency (FHFA) home price index for clues to the health of the U.S. housing sector, a major part of the national economy.
Prices at 3:39 p.m. EST (7:39 p.m. GMT)
Additional reporting by Amanda Cooper in London; Editing by David Gregorio