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 settled up $2.20 at $1,495.10, having earlier hit a record $1,500.50 an ounce.

Spot gold 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 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.

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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

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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 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 slipped 0.4 percent to $1,766.24 an ounce, while palladium 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 1495.10 2.20 0.1% 5.2% US silver 43.913 0.957 0.0% 41.9% US platinum 1771.30 -11.50 -0.6% -0.4% US palladium 731.10 -8.00 -1.1% -9.0% Gold 1495.19 0.11 0.0% 5.3% Silver 43.90 0.58 1.3% 42.3% Platinum 1766.24 -6.41 -0.4% -0.1% Palladium 730.47 -9.46 -1.3% -8.6% Gold Fix 1490.50 -4.50 -0.3% 5.7% Silver Fix 43.22 43.00 1.0% 41.1% Platinum Fix 1780.00 2.00 0.1% 2.8% Palladium Fix 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)