* Gold up on bleak US economic outlook despite debt deal
* Weak U.S. consumer spending triggers safe-haven buying
* Korea buys gold, first time in 13 years, lifts sentiment
* Coming up: US ADP Employment index Wednesday (Recasts, updates prices, market activity)
By Frank Tang
NEW YORK, Aug 2 - (Reuters) - Gold surged over 2 percent to all-time highs on Tuesday, as investors scrambled for a safe haven from sliding stock markets, a sputtering economy and a potential downgrade of the top-notch U.S. credit rating.
Bullion notched its biggest daily gain since Nov. 5, just after the U.S. Federal Reserve launched a second round of government debt purchases, or quantitative easing. Some investors believe the Fed may soon embark on a third round of dollar-printing stimulus to revive the moribund U.S. economy.
Wall Street stocks slid more than 2 percent, while safe havens such as Swiss franc and U.S. Treasury debt rose sharply, after data showed consumer spending fell for the first time since September 2009.
After weak manufacturing and second-quarter growth data in recent days, the economic gloom overshadowed the U.S. deficit-cutting package that finally buried the specter of a government default. [.N] [US/]
Bullion also got a boost from jitters about a possible downgrade to the U.S. AAA credit rating and news that South Korea had added gold to its foreign reserves for the first time since the Asian crisis of the late 1990s.
Euro zone debt fears also triggered gold buying by jittery investors, as yields on Italian and Spanish bonds hit their highest levels in 14 years.
"The debt ceiling distraction may now be behind the markets, but the damage has been done," said John Kilduff, partner at hedge fund Again Capital LLC.
"We are witnessing a quickly deteriorating economic backdrop that will pressure all asset classes. Policymakers need to next implement measures that will foster growth."
Spot gold
U.S. gold futures for December delivery
Silver
Bullion has rallied around 17 percent so far this year, and has gained more than 10 percent since the end of June when the Federal Reserve's $600 billion bond-buying program ended.
Some investors worried about the risk of a recession that could prompt the Fed to use more stimulus, feeding inflation.
"With the worse-than-expected manufacturing index and personal spending data, gold is starting to factor in the need for further quantitative easing...and that's why it's pushed into a record," said James Rife, an assistant portfolio manager at Haber Trilix Advisors, which manages $2 billion in assets.
U.S. consumer spending slipped 0.2 percent in June, the Commerce Department reported, a day after another report showed factory activity cooled in June and two days after GDP figures showed the economy came close to contraction in the first quarter.
FOMC MEETING, CENBANK BUYING IN FOCUS
Financial markets will watch the Fed's policy meeting next week for any signs of new monetary stimulus. Some market watchers suggested Chairman Ben Bernanke may take the opportunity at the Fed's annual retreat in Wyoming later this month to hint at economic stimulus through a third round of central bank bond purchases, or quantitative easing.
"The stock markets after the Jackson Hole speech last August have been pricing in a lot of good news and it's not materializing. All these money have been printing but it does not translate to huge growth," said Axel Merk, portfolio manager of Merk Funds, which has $700 million in assets.
Merk said doubts about the viability of the currency markets also helped propel gold to record highs.
Gold has hit record highs in dollars, euros, sterling, South African rand and Canadian dollars, indicating investors' distrust of volatile currencies. Central banks also remain buyers of bullion, with South Korea saying on Tuesday it bought 25 tonnes of gold between June and July to diversify its foreign reserves. It was its first purchase in more than a decade, boosting gold holdings to 39.4 tonnes. [ID:nL3E7J12SC]
Gold also benefited as investors sought safe-haven assets such as the Swiss franc and U.S. Treasury debt at the expense of riskier assets, while the dollar and euro hit record lows against the franc.
Platinum group metal prices were mixed as investors digested news major automakers posted July U.S. sales that ticked up from the slump of recent months, but failed to dispel doubts about the economy and U.S. consumers. [ID:nN1E77012D]
Platinum
SETTLE CHNG CHNG VOL US Gold DEC 1644.50 22.80 1.4 1618.80 1661.90 154,718 US Silver SEP 40.092 0.783 2.0 39.210 40.885 43,865 US Plat OCT 1793.50 -1.10 -0.1 1788.10 1801.30 4,426 US Pall SEP 826.90 -2.60 -0.3 822.50 835.15 2,302 Gold 1656.69 38.59 2.4 1616.79 1658.90 Silver 40.750 1.500 3.8 39.220 40.840 Platinum 1790.50 2.00 0.1 1790.00 1795.75 Palladium 823.44 -1.81 -0.2 824.02 833.00 TOTAL MARKET VOLUME 30-D ATM VOLATILITY
CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 178,591 194,205 178,235 18.73 0.08 US Silver 46,967 72,003 60,704 40.49 -0.36 US Platinum 4,474 6,912 7,258 22 2.00 US Palladium 2,368 3,398 3,678 (Additional reporting by the New York Treasury Desk and Amanda Cooper in London; Editing by David Gregorio)