PRECIOUS-Gold futures hit record above $1,500/oz; dlr falls

                                
 * U.S. gold futures briefly rise above $1,500/oz
                                
 * Euro zone debt, U.S. deficit fears keep markets on edge
                                
 * Gold/silver ratio drops to lowest since 1983
                                
 * Coming up: U.S. existing home sales on Wednesday
 (Adds comment, updates prices)
                                
 By Frank Tang
                                
 NEW YORK, April 19 (Reuters) - Gold futures hit an all-time
high above $1,500 an ounce on Tuesday and silver surged on a
combination of dollar decline, crude oil gains and worries
about sovereign debt problems in Europe.
                                
 After being initially pressured by technical selling,
bullion rose to a record for a second straight day on market
jitters after Standard & Poor's on Monday revised the credit
outlook of the United States to negative from stable.
                                
 U.S. gold futures activity was quieter than usual as global
stock markets steadied following the previous session's equity
sell-off on S&P's move. The CBOE gold volatility index <.GVZ>,
a gauge of bullion investor anxiety, fell 2 percent after
surging to its highest level in four months on Monday.
                                
 "There is gaining evidence that the governments are not
gaining control of spending and the monetization of debt is in
full force. The world is starting to look more critically at
these things ... which are becoming real issues," said Robert
Lutts, chief investment officer of Cabot Money Management, a
wealth manager with $500 million in client assets.
                                
 U.S. gold futures for June delivery <GCM1> settled up $2.20
at $1,495.10, having earlier hit a record $1,500.50 an ounce.
                                
 Spot gold <XAU=> gained 0.11 cents to $1,495.19 an ounce by
3:03 p.m (1903 GMT), bouncing off a high of $1,499.31. Bullion
rose for a fifth consecutive session.
                                
 Gold benefited as a safe haven from economic uncertainty
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 on Monday.
                                
 Silver <XAG=> set a 31-year high of $43.92 an ounce, and
was later up 1.3 percent at $43.90.
                                
 Silver has outperformed gold this year, up more than 40
percent so far against gold's 5 percent rise. The gold/silver
ratio slipped to a 28-year low below 35 on Monday.
                                
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
                                
  Graphic showing gold:silver ratio:
                                
  http://r.reuters.com/jyx88r
                                
  Graphic showing gold prices in inflation-adjusted terms:
                                
  http://r.reuters.com/ren88r
                                
  Graphic showing commodity performance:
                                
  http://r.reuters.com/duj88r
                                
  Graphic showing inflation-adjusted record high:
                                
  http://r.reuters.com/ren88r
                                
  Graphic showing gold priced in euros:
                                
  http://link.reuters.com/xux98r
                                
  ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 CRUDE OIL GAINS, DOLLAR DROPS
                                
 Rising U.S. crude prices also lifted 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.
                                
 Gold remained far below its all-time inflation-adjusted
high, estimated at almost $2,500 an ounce, set in 1980, an era
of Cold War tension, oil shocks and hyperinflation.
                                
 Cabot's Lutts said that gold could benefit from an
increasing allocation by institutional investors as a wealth
preservation strategy. Many pension plans and school endowment
funds invest primarily in equities and fixed-income securities
and have not yet ventured into gold.
                                
 Bullion also benefited from a stronger euro against the
dollar after the euro zone composite PMI private-sector
economic indicator nudged up. [FRX/]
                                
 Dennis Gartman, publisher of the Gartman Letter, said that
he will buy gold in euro terms <XAUEUR=R> on any correction
toward 1,025 euros after a breach of 1,050 euros on Monday.
Euro-priced gold traded at around 1,040 euros on Tuesday.
                                
 Among other precious metals, platinum <XPT=> slipped 0.4
percent to $1,766.24 an ounce, while palladium <XPD=> dropped
1.3 percent to $730.47.
Prices at 3:03 p.m. EDT (1903 GMT)    
                                
                          LAST/      NET    PCT     YTD
                                
                          CLOSE      CHG    CHG     CHG
US gold         <GCM1>     1495.10     2.20   0.1%    5.2%
US silver       <SIK1>      43.913    0.957   0.0%   41.9%
US platinum     <PLN1>     1771.30   -11.50  -0.6%   -0.4%
US palladium    <PAM1>      731.10    -8.00  -1.1%   -9.0%
Gold            <XAU=>     1495.19     0.11   0.0%    5.3%
Silver          <XAG=>       43.90     0.58   1.3%   42.3%
Platinum        <XPT=>     1766.24    -6.41  -0.4%   -0.1%
Palladium       <XPD=>      730.47    -9.46  -1.3%   -8.6%
Gold Fix        <XAUFIX=>  1490.50    -4.50  -0.3%    5.7%
Silver Fix      <XAGFIX=>    43.22    43.00   1.0%   41.1%
Platinum Fix    <XPTFIX=>  1780.00     2.00   0.1%    2.8%
Palladium Fix   <XPDFIX=>   737.00     1.00   0.1%   -6.8%
 (Additional reporting by Jan Harvey in London; Editing by Lisa
Shumaker, Sofina Mirza-Reid and Jim Marshall)