Gold hit a record dollar high above $1,250 an ounce and new peaks in other currencies on Tuesday as concern over Europe's economic outlook lifted risk aversion, reversing early gains for the euro and stock markets. Concern grew over prospects for a European economic recovery after ratings agency Fitch warned the UK faced a "formidable" challenge in its plan to cut government borrowing. Spot gold rose as high as $1,251.50 an ounce, and was at $1,247.45 an ounce at 0956 GMT against $1,238.05 late on Monday. US gold futures for August delivery hit a record $1,254.50 and was later up $9.20 at $1,250 an ounce. The precious metal is benefiting from fears the euro zone's sovereign debt crisis may spread, weighing on global economic recovery, analysts said. "It is mainly the fear of another slide into recession which is seeing demand for gold as a safe haven," said Commerzbank analyst Daniel Briesemann. "Gold is currently rising in dollars and in euros," he added. "There is a lack of confidence, given the uncoordinated measures against the sovereign debt crisis, which is obviously (affecting) both currencies." Euro-priced gold also hit a record 1,050.86 euros an ounce, while gold priced in sterling and Swiss francs hit all-time highs of 869.87 pounds an ounce and 1,450.40 francs an ounce respectively. The euro gave up early gains versus the dollar to fall on Tuesday, having tumbled to a four-year low a day before. Euro zone sovereign debt concerns resurfaced this week after Hungary warned about its deficit on Friday. Equities surrendered early gains, giving up 1.4 percent. World stocks also fell. Core euro zone debt futures hit a contract high and the premium investors demand to hold 10-year French, Italian and Spanish government bonds rather than German benchmarks rose on Tuesday in risk-averse trading. With the fear factor still dominating the financial markets, gold is set for further gains, analysts said. "Right now it's too difficult to stand in front of a moving train," said UBS analyst Edel Tully in a note. INVESTMENT FIRM Investment interest in gold held firm, with holdings of the world's largest gold exchange-traded fund, New York's SPDR Gold Trust , unchanged on Monday, but high prices weighed on physical demand in the world's top gold consumer, India. Premiums for gold bars slipped in Asia on Tuesday after bullion raced towards a lifetime high, while purchases from Indian jewellers slowed to a trickle as the monsoon progressed in the world's largest consumer. From a technical perspective, gold's break higher on Monday has left it well positioned to make new highs, according to analysts who study charts of past price movements to determine the future direction of trade. "Gold in dollars broke through $1,232 retracement resistance, clearing the way for a retest of $1,250..., while gold in euro terms again made new bull market highs," said Barclays Capital technical analysts in a note. "In dollar terms, $1,250 may prove to be near-term resistance, but we ultimately target a run toward long-term channel resistance at $1,374. In euro terms, we target $1,118 following the break of $1,013 range highs." Silver was bid at $18.35 an ounce against $18.09, platinum at $1,522.75 an ounce versus $1,512, and palladium at $430.20 versus $430.

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