* Gold, silver retreat from highs
* Libya peace plan, Goldman comments prompt selling
* Fed monetary policy, inflation in focus
* Coming up: U.S. import/export prices on Tuesday (Recasts, updates market activity, adds comment)
By Frank Tang
NEW YORK, April 11 (Reuters) - Gold and silver hit new highs on Monday before falling in tandem with crude oil, as safe-haven bids faded after a peace plan surfaced to end Libya's two-month-old civil war.
After hitting a record high $1,476.21 an ounce earlier, gold was pressured on an African Union's Libya peace initiative and as investors heeded a recommendation from long-term commodities bull Goldman Sachs. Silver also backed off a 31-year high.
"The war premium in the metals seems to have diminished as news that a possible ceasefire in Libya and the willingness to negotiate a settlement is weighing on the market," said George Nickas of commodities futures broker FC Stone.
Spot gold was down 0.4 percent at $1,466.59 an ounce by 2:21 p.m. EDT (1821 GMT). U.S. gold futures for June delivery settled down $6 at at $1,468.10.
Investors cautiously eyed the peace plan, which collapsed within hours after Libyan leader Muammar Gaddafi's forces shelled a besieged city and rebels warned of no deal unless he was toppled.
Bullion was also under heavy pressure after Goldman claimed there was a strong chance that commodities prices might reverse and recommended clients take profits on what has been a hugely profitable trade.
Spot silver retreated from a session high of $41.93, the strongest since 1980. It later fell 0.4 percent to $40.68 an ounce. May silver settled up 0.4 cent at $40.612.
The gold-to-silver ratio -- showing the relative strength between the two metals -- fell to 36 Monday, approaching its lowest level in recent decades at just above 32, set in 1983 after the Hunt Brothers cornered the silver market.
The spreads between gold and silver have nearly halved since last August.
"After three years of undervaluation, silver is now looking expensive again. Silver will also be more vulnerable than gold to a slowdown in the global economy," Capital Economics strategists said in a note.
Fund managers said silver was expected to outperform gold in a bull metals markets because the white metal bears a higher risk and price volatility than gold.
'RETAIL FLOWS INTO SILVER'
Despite Monday's decline, investor money has flowed into precious metals so far this month as investors worried about the potential for rising inflation in developing markets and changes to monetary policy in the United States.
Holdings of the world's largest gold-backed exchange traded fund, SPDR Gold Trust, climbed 6 tonnes to about 1,217 tonnes as of Friday -- the strongest level in nearly a month.
No. 1 iShares Silver Trust said holdings held at a record at 11,192.80 tonnes.
"There is a lot of retail flows into silver products, particularly coins. Many smaller investors are allocating more of their portfolios to silver today," said Robert Lutts, chief investment officer of Cabot Money Management, a wealth manager with about $500 million in client assets.
Dollar weakness initially lifted gold. Analysts said the dollar could further weaken because of the widening interest rate differentials after the European Central Bank's interest rate hike last week.
Meanwhile, the U.S. central bank's ultra-loose monetary policy remains appropriate, given high unemployment and tame underlying inflation trends, said Janet Yellen, the Federal Reserve's vice chair, echoing views expressed by Chairman Ben Bernanke.
Gold has been a major beneficiary since the Fed has kept short-term rates near zero since December 2008.
Among other precious metals, platinum was down 1.2 percent at $1,781.74 an ounce, while palladium dropped 0.8 percent to $784.47.