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.
The CBOE gold volatility index, a gauge of bullion investor anxiety, fell 4 percent after surging to its highest level in four months on Monday. US gold futures activity was quieter than usual as global stock markets steadied following the previous session's equity sell-off. "It's follow-through buying from yesterday after the market had absorbed an initial bout of profit-taking. The recovery of oil prices and the euro have combined to take gold to the $1,500 level," said James Steel, chief commodity analyst of HSBC.
US gold futures for June delivery settled up $2.20 at $1,495.10 by 2:00 pm EDT (1800 GMT), having earlier hit a record $1,500.50 an ounce. Spot gold gained 0.1 percent to $1,496.69 an ounce, bouncing off a high of $1,499.31. Bullion was set for its fifth consecutive higher session. Silver also 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. 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. Among other precious metals, platinum slipped 0.4 percent to $1,766 an ounce, while palladium dropped 1.2 percent to $730.72.
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