* Gold prices retain correlation with 'risk' assets * Hopes for speedy resolution to fiscal cliff lift assets * Gold/silver ratio holds near two-month low (Changes trade comment, updates prices, previous SINGAPORE) By David Brough LONDON, Nov 29 (Reuters) - Gold firmed on Thursday in line with stocks and other commodities, further retracing the previous day's sharp fall, as renewed optimism that a deal will be reached to resolve the U.S. fiscal crisis boosted appetite for assets seen as higher risk. World shares hit three-week highs and commodities rose as comments from a senior U.S. lawmaker raised hopes of a budget deal by year-end to avoid a fiscal crisis in the world's biggest economy. House of Representatives Speaker John Boehner voiced optimism on Wednesday that Republicans could broker a deal with the White House to avoid a $600 billion crunch of spending cuts and tax hikes dubbed the "fiscal cliff". The implications of the cliff for gold are unclear. Protracted talks, which could heighten risk aversion, may be positive if they spark buying of the metal as a haven from risk, but in the short term, hopes for a quick resolution are benefiting gold as it keeps pace with stocks. "Gold is being pulled higher on this prevailing optimism over the fiscal cliff," said Ross Norman, chief executive of bullion dealer Sharps Pixley. "One would expect good news on the fiscal cliff to be gold-negative, but now gold is acting as a risk asset like shares." Spot gold was up 0.2 percent at $1,723.51 an ounce at 1054 GMT, after tumbling 1.3 percent in the previous session due to a heavy bout of stop-loss selling. U.S. gold rose $7.60 an ounce to $1,724.10. UBS said in a daily market note that despite the selling on Wednesday, it had observed little client appetite to follow the trend, suggesting that gold remained well-supported. "For now... the market moves into contemplative mode, with some participants licking their wounds while others weigh up the pros and cons of going long or short the metal in its aftermath," it said. "We don't think anything has materially changed for gold. Essentially the metal is back to where it was trading last week. This is another test of downside buying interest but it also highlights the commitment issues that reside when the market attempts to climb higher." SUPPORT ABOVE $1,700/OZ Gold prices found good support at $1,720 an ounce earlier, a key retracement of the decline from its October high of $1,795.69 an ounce to its November low at $1,672.24, and the location of its 30-day moving average. "Gold broke below the ascending channel which had been developing since early November (at) 1737/35," Societe Generale said in a note. "(Key support level) $1,703 is the 61.8 percent retracement of the recovery from 1672 to 1754, as well as the lows of early/mid-November." Dealers said cheaper gold prices after the technically driven sell-off on Wednesday augured well for increased buying of physical metal. Gold importers in India, the world's biggest buyer of the metal, sprang back in action, accumulating stocks in small quantities, as prices fell to hit their lowest in nearly two weeks. Holdings of the SPDR Gold Trust, the world's biggest gold-backed exchange-traded fund, hit a record high for a second consecutive day, underlying buoyant investment interest. Its holdings stood at 1,347.018 tonnes on Nov. 28, up nearly 11 tonnes so far this month and on course for its fourth month of straight gains. Spot silver was up 0.1 percent at $33.76, while the gold-silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, stood at 51.1, hovering above a two-month low. Spot platinum was up 0.9 percent to $1,617.75, and palladium was up 0.6 percent at $676.60. (Editing by Jan Harvey and James Jukwey)

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