* Gold targets $1,518 - technicals
* Correction seen after strong rally in gold and silver
* Coming up: U.S. housing data, March; 1230 GMT
(Adds detail, comments; updates prices)
By Rujun Shen
SINGAPORE, April 19 (Reuters) - Spot gold firmed slightly
below its record high on Tuesday, as worries over sovereign debt
in both Europe and the United States continued to lure investors
to bullion.
Just as talks heated up on if Greece might need to
restructure its debt, Standard & Poor's threatened to cut United
States' prized AAA credit rating, sending the 19-commodity
Reuters-Jefferies CRB index down 1 percent on Monday.
The CBOE Volatility Index, Wall Street's favorite barometer
of investor anxiety known as the VIX , jumped as much as
24.5 percent on Monday after S&P warned about the towering U.S.
budget deficit. [][]
"There is so much news that is in favour of gold," said a
Singapore-based dealer.
"Gold is still the safe-haven of choice."
Spot gold gained as much as nearly 1 percent in early
morning trade, before trimming gains to $1,489.19 an ounce by
0303 GMT, up half a percent. It hit a record high of $1,497.20
in the previous session. U.S. gold futures <GCv1> edged down 0.2
percent to $1,489.80 an ounce.
Concerns about inflation also helped gold shine.
China raised banks' reserve requirement ratio on Sunday to
its record level, its fourth such move this year, to wrestle
down inflation, while some U.S. Federal Reserve officials have
warned about more pressing inflation risks in coming months.
[]
But there is little sign that the Fed could cut short its
$600 billion bond purchase programme, due to complete in June.
Crude oil prices extended losses on worries that high oil
prices would threaten global economic recovery, which supports
the strength in gold prices.
Technical analysis indicated gold's bullish target remained
intact at $1,518, according to Reuters market analyst Wang Tao.
[]
CORRECTION LOOMS
Spot gold marched up about $40 over the last seven days, and
silver hit 31-year highs in the past three consecutive sessions.
Although the macroeconomic and geopolitical environment is
supportive of safe-haven demand in such metals, a correction may
be looming, said some traders and analysts.
"We may see a correction before the Easter holiday," said
Ronald Leung, a dealer at Lee Cheong Gold Dealers in Hong Kong,
"prices have been rising too fast and too much."
Downside room will be limited for both gold and silver, with
$1,480 providing strong support to gold, and $40 to silver,
traders said.
Some physical selling was spotted, as market participants
took profit and waited for next buying opportunities when prices
pull back, dealers said.
Spot silver declined 1 percent to $42.89 an ounce,
after hitting a 31-year high of $43.51 in the previous session,
as weakness in the equities market weighed on precious metals
that have industrial applications, such as silver and platinum
group metals.
Spot palladium declined to nearly one-month low of
$729.21, before regaining some lost ground to $731.50, down 1.1
percent from the previous close.
Precious metals prices 0303 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1489.19 7.84 +0.53 4.91
Spot Silver 42.89 -0.43 -0.99 38.98
Spot Platinum 1772.24 -0.41 -0.02 0.27
Spot Palladium 731.50 -8.43 -1.14 -8.51
TOCOM Gold 3963.00 -4.00 -0.10 6.28 38526
TOCOM Platinum 4742.00 -54.00 -1.13 0.98 11321
TOCOM Silver 113.90 -1.00 -0.87 40.62 2468
TOCOM Palladium 1952.00 -89.00 -4.36 -6.91 334
COMEX GOLD JUN1 1489.80 -3.10 -0.21 4.81 6814
COMEX SILVER MAY1 42.91 -0.05 -0.12 38.67 4610
Euro/Dollar 1.4219
Dollar/Yen 82.56
TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months
(Editing by Himani Sarkar)
