* Euro zone debt, U.S. deficit fears keep markets on edge
* Investors still eyeing $1,500/oz psychological resistance
* Gold:silver ratio at lowest in 28 years
(Releads, updates prices, adds comment)
By Jan Harvey
LONDON, April 19 (Reuters) - Gold hit record highs near
$1,500 an ounce for a second successive day on Tuesday, with
appetite for risk fragile after Standard & Poor's cut its U.S.
outlook and euro zone sovereign debt concerns simmered.
Prices earlier rose to a record $1,497.86 as the dollar
wilted, just above the level they hit the previous day after the
S&P announcement hit the markets. They have since slipped back
after running into strong resistance at higher levels, however.
Spot gold <XAU=> was bid at $1,492.59 an ounce at 1344 GMT,
against $1,495.08 late in New York on Monday. U.S. gold futures
for June delivery <GCv1> rose 30 cents to $1,493.30.
Afshin Nabavi, head of trading at MKS Finance in Geneva,
said gold was being driven by safe-haven buying.
"Gold, silver and (the Swiss franc) are all attracting lots
of attention," he said. "Every corner of the world you look at,
there is a problem politically or economically."
The euro edged higher against the dollar on Tuesday after
the previous day's sell-off, but debt problems in the euro zone
kept investors wary of the single currency. []
The CBOE Volatility Index, Wall Street's favourite barometer
of investor anxiety known as the VIX <.VIX>, jumped as much as
24.5 percent on Monday after S&P warned about the towering U.S.
budget deficit. [][]
Risky assets were hit by a double-whammy on Monday after
fears mounted that Greece will have to restructure its debt,
maybe as early as this summer, and S&P threatened to cut the
United States' AAA credit rating.
"Most of the trends out there -- whether that's worries
about the euro, worries about coming inflation, worries about
U.S. debt, Chinese buying seeming relatively strong -- suggest
the price ought to be going higher," said David Jollie, an
analyst at Mitsui Precious Metals.
"It seems there is a reasonable appetite still to buy, but
if you look at the pace, it has gone up at in the last week.
That doesn't seem sustainable," he added.
"It would be a surprise if we don't get to $1,500 an ounce,
but it would also be a surprise if we shot through it."
CRUDE OIL CORRECTS
Oil prices continued to correct, however, with U.S. crude
futures falling by $1 a barrel in early European trade. Strength
in crude after unrest across the Middle East and North Africa
earlier this year was a key factor driving gains in gold. []
Rising crude prices tend to lift gold, which is often seen
as a hedge against oil-led inflation. Signs that inflation is
becoming a major issue in emerging markets, particularly China,
has been identified as another support to the precious metal.
Silver <XAG=> also held near the previous session's 31-year
high of $43.51 an ounce, last bid at $43.20 an ounce against
$43.32 on Monday.
Silver has outperformed gold this year, up 40 percent so far
against gold's 5 percent rise. The gold:silver ratio slipped to
a 28-year low below 35 on Monday.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For graphic showing the gold:silver ratio:
http://r.reuters.com/jyx88r
Graphic showing gold prices in inflation-adjusted terms:
http://r.reuters.com/ren88r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Among other precious metals, platinum <XPT=> was at
$1,776.24 an ounce against $1,772.65, while palladium <XPD=> was
at $733.99 against $739.93.
(Editing by Alison Birrane)
