* Gold hits record high above $1,230/oz on safe-haven play
* Gold in euros, Swiss francs also reaches record
* Silver prices track gold up to five-month highs
* Coming up: U.S. federal budget due Wednesday
(Recasts, adds comments, updates prices to market close,
changes byline, dateline, previously LONDON)
By Frank Tang
NEW YORK, May 11 (Reuters) - Gold jumped nearly 3 percent
to an all-time high at above $1,230 an ounce on Tuesday, as
traders sought safety after a $1 trillion European rescue
failed to put to rest fears of euro zone debt contagion.
After trading modestly higher in choppy trade earlier in
the day, spot bullion prices kicked above their previous
$1,226.10 peak set on Dec. 3 after U.S. stock markets turned
negative at mid-afternoon, resuming a safe-haven rally that had
threatened to stall with Monday's brief revival of risk
appetite.
Silver also rose 4.5 percent to a five-month peak, posting
its biggest one-day percentage gain in six months, while
platinum and palladium were little changed.
Having broken down the previous high, analysts began
looking for the next target.
"We think there is an upside risk for gold and it has the
potential to go to $1,600 (an ounce) within a year or so," said
Bart Melek, global commodity strategist at BMO Capital
Markets.
"We think there are continued sovereign risk issues, even
after the European debt bailout. Buying gold or precious metals
generally as a hedge will continue until this environment
stabilizes somewhat."
After touching a record $1,233.65 an ounce, spot gold
<XAU=> rose $30.85 or 2.6 percent to $1,232.75 an ounce at 3:30
p.m. EDT (1912 GMT), against $1,201.90 late on Monday.
U.S. gold futures for June delivery <GCM0> on the COMEX
division of the NYMEX was up more than $30 at above $1,230 an
ounce. Earlier, June settled at $1,220.30 an ounce.
Gold looked primed for a run at the previous record after a
rush of retail buying last week, and its its very limited dip
on Monday, when the S&P 500 index rallied 4 percent as risk
markets cheered the $1 trillion emergency aid package.
"While this provided at least a temporary band aid for the
sovereign debt crisis, there is still a potential for
significant problems and the need to potentially do more," said
Bill O'Neill, partner at New Jersey-based commodities firm
LOGIC Advisors.
"I just don't think there is a high level of confidence.
This package bides time but it doesn't indicate that the crisis
is necessarily over, and that's what gold is reflecting."
Meanwhile, technical analysts have been citing a reverse
head-and-shoulder pattern signaled the metal's next move should
be a test upward to $1,240 an ounce.
Market watchers said the rescue package could be too little
too late to solve a global sovereign debt crisis.
"Investors are trying to search out safe havens, and
clearly gold is one of those," said RBS Global Banking &
Markets analyst Daniel Major. "While the current environment of
acute investor risk aversion remains, gold is bound to
benefit."
Some analysts also doubted the long-term viability of the
euro and potential adverse economic implications given the
massive size of the aid deal.
"Gold has now consistently shown that it does not have to
follow the so-called traditional inverse relationship with the
dollar. It is front and center assuming its role as the
currency of choice," O'Neill said.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
For a graphic showing gold's broken inverse link with the
dollar, click:
http://link.reuters.com/xum63k
For a graphic showing gold's correlation with the dollar
index, click on:
http://link.reuters.com/hym63k
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Gold priced in euros <XAUEUR=R> and Swiss francs <XAUCHF=R>
also hit record highs at 971.34 euros an ounce and 1,367.30
francs an ounce respectively.
SILVER'S BIGGEST ONE-DAY GAIN SINCE NOV.
Silver <XAG=> hit a five-month high at $19.42, and was last
at $19.35 an ounce against $18.44.
Metals research firm CPM Group said in a trade report that
investors bought 209.7 million ounces of silver last year, the
second highest in history, and silver's strong appeal as both a
precious and industrial metal will lift demand further in
2010.
Platinum group metals were largely flat after Monday's
rebound. Platinum <XPT=> was at $1,695.50 an ounce against
$1,693 and palladium <XPD=> at $528.50 against $529.
Close Change Pct 2009 YTD
Chg Close % Chg
US gold <GCM0> 1220.30 19.5 1.6 1096.20 11.3
US silver <SIN0> 19.294 0.742 4.0 16.845 14.5
US platinum <PLN0> 1700.80 7.30 0.4 1471.00 15.6
US palladium <PAM0> 532.20 7.70 1.5 408.85 30.2
Prices at 3:14 p.m. EDT (1914 GMT)
Gold <XAU=> 1230.95 29.05 2.4 1096.35 12.3
Silver <XAG=> 19.35 0.91 4.9 16.84 14.9
Platinum <XPT=> 1695.50 2.50 0.1 1465.50 15.7
Palladium <XPD=> 528.50 -0.500 -0.1 405.50 30.3
Gold Fix <XAUFIX=> 1222.50 13.50 1.1 1104 10.7
Silver Fix <XAGFIX=> 18.42 -4.00 -0.2 16.99 8.4
Platinum Fix <XPTFIX=> 1689.00 3.00 0.2 1466 15.2
Palladium Fix<XPDFIX=> 521.00 1.00 0.2 402 29.6
(Additional reporting by Jan Harvey in London)
