* Gold rallies to record as oil surges, dollar slips
* Concerns over U.S. growth, euro zone stability fuel gains
* Silver tracks gold higher, hits 31-year peak
(Updates prices)
By Jan Harvey
LONDON, April 20 (Reuters) - Gold rose above $1,500 an ounce on Wednesday for the first time ever as the dollar wilted, oil rose, worries over the U.S. economic outlook boosted demand for the metal as a haven and rising inflation lifted Asian demand.
The Reuters-Jeffries CRB index was on track for its biggest one-day gain in a fortnight as commodity prices rallied.
Spot gold Silver tracked gold higher, extending a stellar performance
that has seen the grey metal outperform other precious metals
this year. Silver hit a 31-year high at $44.79 an ounce and was
later bid at $44.72 against $43.89. Gold prices are up 5 percent in April and look set to extend
gains as the metal's appeal as a haven from risk was boosted by
talk that Greece may have to restructure its debt and Standard &
Poor's threat to downgrade America's triple-A credit rating. "Gold has been acting as a currency in its own right, and
that is why we are up at $1,500," said Simon Weeks, head of
precious metals at the Bank of Nova Scotia. "There is an awful
lot of bad news in the price. The S&P comment the other day has
given us the final kicker to get up here." While investors in the United States and Europe are seeing
the metal chiefly as a safe store of value and a hedge against
currency devaluation, stronger inflation and rising consumer
incomes in China and India are also boosting demand there. "The theme of longer term higher inflation than we have seen
in the last 10 years in China is a pretty solid view, so gold is
going to be an asset class that is probably going to be more in
favour in China than it has been in the past," said Macquarie
analyst Hayden Atkins. China is the world's second-biggest gold consumer behind
India, as well as being the biggest producer. RISING OIL, WEAKER DOLLAR In the short term, losses in the dollar on Wednesday are
supporting the precious metal above $1,500 an ounce. The dollar
is usually sold off when risk appetite firms, as reflected in a
rise in stock markets on Wednesday. The dollar slid to its lowest in 15 months against the euro
as the single currency was boosted by higher risk appetite and
after a bond auction from Spain was well received by investors. Weakness in the dollar boosts gold's appeal as an
alternative asset and makes dollar-priced commodities cheaper
for holders of other currencies. Gold priced in euros and
sterling remained off recent highs on Wednesday. Oil prices also recovered, rising back towards the
multi-year highs they hit earlier this year as unrest in the
Middle East and North Africa sparked fears of a supply outage. Higher oil prices tend to benefit gold, both because they
can boost commodities as an asset class and lift interest in
gold as a hedge against oil-led inflation. The gold:silver ratio -- the number of silver ounces needed
to buy an ounce of gold -- meanwhile fell to its lowest since
1983 below 34. "The last time silver was this expensive in relation to gold
was almost 28 years ago," said Commerzbank in a note. "Both
precious metals are still reaping the benefit of the news of
recent weeks and days." Platinum was at $1,800.99 an ounce against $1,761.50, while
palladium was at $754.97 against $726.95.
(Editing by Alison Birrane/James Jukwey)