* Gold rises to record amid fears of recession, euro debts
* Wall St, risk assets pummeled; Treasuries, havens up
* Gold demand, ETF buying dropped in Q2 - industry group
* Coming up: U.S. CFTC Commitment of Traders report Friday (Adds details, changes dateline, previously NEW YORK/LONDON)
By Frank Tang
NEW YORK, Aug 18 (Reuters) - Gold rallied 2 percent to a new high above $1,820 an ounce on Thursday after U.S. data pointed to a stalled economy, while renewed concern about the health of European banks brought additional safe-haven buying.
Bullion's fourth consecutive daily rise came after news that factory activity in the U.S. Mid-Atlantic region plummeted and existing home sales unexpectedly dropped.
Investors dumped stocks and other riskier assets for the
perceived security of gold and U.S. government bonds. The Dow
Jones industrial stock average <.DJI> fell 5 percent and crude
oil
However, a break above $2,000 an ounce could be difficult due to weaker interest in gold exchange-traded funds and after a $350 rally in the past 1-1/2 months, analysts said.
"We hold gold because we believe that inflation will be part of the solution to address the problems of the world," said Axel Merk, portfolio manager of Merk Funds, which has $750 million in assets.
"We are potentially entering a stagflationary period," Merk said, referring to persistent inflation combined with stagnant growth and high unemployment.
Spot gold
U.S. gold futures for December delivery
Silver
In addition to the disappointing manufacturing and home sales reports, U.S. Labor Department data showed that consumer prices increased at the fastest pace in four months in July, while weekly initial jobless claims rose. [ID:nLDE77H0MP] [ID:nN1E77H0E8]
Adding to market nervousness and interest in gold was a Wall Street Journal report that the U.S. Federal Reserve Bank is taking a closer look at the U.S. units of Europe's biggest lenders. [ID:nN1E77H0E8] [ID:nL5E7JI0Q]
Bullion rose broadly across major currencies, with gold
priced in Japanese yen
On the gold options front, the CBOE Gold ETF Volatility
Index <.GVZ>, which is often referred to as the "Gold VIX" and
is based on SPDR Gold Trust
"Option dealers are buying a lot of calls and they are very bullish," said Jonathan Jossen, independent COMEX gold options floor trader. Investors are using option strategies such as bull call spreads and fences to bet on the metal's upside, he added.
GOLD DEMAND FALLS
Some analysts said gold could pull back as much as 30 percent. On charts, the relative strength index shows bullion is well into overbought territory, and the metal has breached a multi-year rising channel top, suggesting a correction is possible.
The World Gold Council said overall gold demand fell 17 percent in the second quarter as growing interest in jewelry, coins and bars failed to offset a sharp decline in ETF buying.
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WGC report: [ID:nL5E7JH0ZO] [ID:nL5E7JH0ZD]
Interview with WGC: http://link.reuters.com/hah33s
GRAPHIC on WGC research: http://link.reuters.com/byh33s
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In addition, metals consultant GFMS, a unit of Thomson Reuters, said gold could hit $1,900 an ounce in the next six months, driven by buyers seeking an investment safe from global economic problems, but a further rise to $2,000 looks unlikely. [ID:nL3E7JI3HS]
Platinum
SETTLE CHNG CHNG VOL US Gold DEC 1822.00 28.20 1.6 1786.80 1832.00 194,331 US Silver SEP 40.688 0.337 0.8 40.080 40.950 43,081 US Plat OCT 1847.70 6.90 0.4 1824.60 1849.00 6,718 US Pall SEP 757.00 -18.90 -2.4 748.30 779.70 3,686 Gold 1825.60 37.45 2.1 1784.80 1826.89 Silver 40.650 0.470 1.2 40.090 40.860 Platinum 1833.00 -2.60 -0.1 1826.50 1843.00 Palladium 751.28 -18.95 -2.5 751.02 777.00 TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 236,916 239,514 186,266 27.05 2.10 US Silver 59,168 70,599 60,266 41.2 -1.63 US Platinum 6,881 6,427 7,681 25.4 2.48 US Palladium 4,197 4,498 4,161 (Additional reporting by Amanda Cooper in London; Editing by Alden Bentley and Dale Hudson)