* Gold targets $1,518 -technicals
* Correction seen after strong rally in gold and silver
* Coming up: U.S. housing data, March; 1230 GMT
(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.
Spot gold gained nearly 1 percent in early trade,
before trimming gains to $1,490.95 an ounce by 0559 GMT, up 0.7
percent. It hit a record high of $1,497.20 in the previous
session. U.S. gold futures <GCv1> were little changed at
$1,492.10.
Concerns about inflation also helped gold shine.
"There is so much news that is in favour of gold," said a
Singapore-based dealer.
"Gold is still the safe-haven of choice."
Just as talk heated up on whether Greece might need to
restructure its debt, Standard & Poor's threatened to cut the
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. [][]
China raised banks' reserve requirement ratio on Sunday to a
record level in its fourth such move this year aimed at
wrestling down inflation, while some U.S. Federal Reserve
officials have warned about more pressing inflation risks in
coming months. []
But there is little sign the Fed could cut short its $600
billion bond purchase programme, due to be completed 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 supports
safe-haven demand in such metals, a correction may be looming,
some traders and analysts said.
"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 the next buying opportunities when
prices pull back, dealers said.
Spot silver declined 0.8 percent to $42.96 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
with industrial applications, such as silver and platinum group
metals.
Spot palladium fell to a nearly one-month low of
$728.64, before regaining some lost ground to $732.72, down 1
percent from the previous close.
Precious metals prices 0559 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1490.95 9.60 +0.65 5.04
Spot Silver 42.96 -0.36 -0.83 39.21
Spot Platinum 1775.00 2.35 +0.13 0.42
Spot Palladium 732.72 -7.21 -0.97 -8.35
TOCOM Gold 3963.00 -4.00 -0.10 6.28 47400
TOCOM Platinum 4746.00 -50.00 -1.04 1.06 14724
TOCOM Silver 113.70 -1.20 -1.04 40.37 2909
TOCOM Palladium 1957.00 -84.00 -4.12 -6.68 378
COMEX GOLD JUN1 1492.10 -0.80 -0.05 4.97 11419
COMEX SILVER MAY1 42.99 0.03 +0.07 38.93 9190
Euro/Dollar 1.4220
Dollar/Yen 82.43
TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months
(Editing by Clarence Fernandez)
