* Gold hits record above $1,480/oz
* Euro zone debt concerns seen as ultimately gold-supportive
* Inflation on the up in China, India
* Silver reaches 31-year high above $42/oz
(Updates prices, adds comment)
By Jan Harvey
LONDON, April 15 (Reuters) - Gold hit record highs on Friday
as euro zone sovereign debt concerns, worries over inflation and
expectations U.S. monetary policy will stay accommodative all
conspired to lift the precious metal.
Silver is also holding near its earlier 31-year high at
$42.68. The metals retreated from highs as the euro slipped in
mid-afternoon trade, but regained traction after U.S. consumer
confidence data pulled the dollar from highs.
Spot gold <XAU=> was at $1,480.30 an ounce at 1425 GMT,
versus $1,472.90 late on Thursday, having earlier hit a record
$1,481.14. Silver <XAG=> was at $42.60 against $42.08. U.S. gold
futures for June delivery <GCv1> rose $9.30 to $1,481.70.
"Gold is still in a healthy upward trend," said LGT Capital
Management analyst Bayram Dincer. "You have so much uncertainty
over whether the U.S. economy will recover, what the next
monetary policy step will be."
"I don't think real interest rates will be (a drag) in the
short term or medium term for the gold price," he added. "As
long as the opportunity cost for gold holding is low, we will
see higher prices."
Gold eased back from a record high mid-afternoon as the euro
fell versus the dollar on worries over the euro zone financial
crisis, after more talk that Greece may be set to restructure
its debt and a Moody's downgrade of Ireland. []
While in the short run gold is sensitive to any move lower
in the euro, in the longer term these fears are set to support
the precious metal.
"The market has been reacting to (the credit issues in
peripheral Europe) by looking for ways to protect themselves
from these types of risks, and gold is seen as a way to do
that," said Deutsche Bank analyst Daniel Brebner.
He said the main impact on gold of elevated debt levels in
Portugal, Greece, Ireland and Spain came from the ways in which
euro zone authorities addressed the issue.
"Do we see a bailout, do we see more money being extended
into these countries, do we see monetary accommodation remaining
very much the bias in Europe?" he said. "If that's the case,
that should be very supportive of gold markets."
DEVELOPING WORLD INFLATION RISES
China and India reported higher-than-expected inflation
readings on Friday, giving fresh ammunition to central bankers
and investors alike who are worried about mounting price
pressures in the global economy. []
Gold, which is often seen as a hedge against inflation,
would likely benefit if inflation pressures rise significantly.
Among other commodities, oil prices turned higher as the
dollar retreated and remain near multi-year highs as fighting in
Libya continues, supporting fears output could be hit. Stronger
oil prices also tend to benefit gold prices. []
Goldman Sachs recommended investors go underweight
commodities over a three to six month horizon, echoing its call
from Monday, saying oil prices are higher than justified by
current supply and demand. []
But gold prices look set to remain firmly underpinned.
"The bullion market has found support one day from economic
uncertainty and changes in risk sentiment, and on another day by
high oil and food prices, and on yet another by sovereign risk
and fiscal concerns," said HSBC analyst Jim Steel in a note.
Among other precious metals, platinum <XPT=> was at
$1,789.74 an ounce against $1,786.49, while palladium <XPD=> was
at $770.50 against $760.63.
(Reporting by Jan Harvey; editing by Alison Birrane)
