Spot silver soared to a 31-year peak of $37.34 an ounce, surpassing its previous high set two weeks ago. It later gained 2.6 percent to $37.92 an ounce.

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Update:  Spot Silver even higher than
its 31 year high, mentioned below It is 
now risen further to $37.92 at 10:15am 
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 (Reuters) - Gold rose to within a whisker of its all-time high on Wednesday, as record low U.S. new home sales stirred talk of extended central banks' accommodative policies, and a possible collapse of Portugal's government rekindled euro zone debt worries.

Bullion rose 0.7 percent to $1,439.76 per ounce, just short of its record $1,444.40 set on March 7, rebounding over 4 percent in the last eight sessions amid safe-haven buying and ongoing Western air strikes onLibya.

"Gold rose on a culmination of further concerns about the European debt issue, coupled with the situation in Libya and very strong crude prices," said Brian Hicks, portfolio manager of U.S. Global Investors' Global Resources Fund (PSPFX.O) with about $1 billion assets under management.

Rising U.S. crude futures also stoke inflation worries on heightened political unrest in the Middle East and North Africa. Yemen's president offered to step down by year end to appease mounting demands for his resignation.

Spot gold rose 0.7 percent to $1,439.60 an ounce by 3:29 p.m. EDT (7:29 p.m. GMT).

Gold accelerated gains to hit a session high of $1,440.90, its highest since March 7, after data showed the U.S. housing market slide was deepening as new home prices fell to their weakest since 2003.

U.S. April futures settled up 0.7 percent at $1,438 an ounce. While commodity markets were mostly quiet on Wednesday, COMEX gold was one of the most actively trading markets with volume approaching 140,000 contracts.

Portfolio managers, including Hicks, said that disappointing new home sales data could lead to an extension of the Fed's $600 billion bond buying program -- dubbed QE2 because it is the second round of quantitative easing -- before it is scheduled to end in June.

"The new home sales data inspired some to think that we may not see the demise of QE2, and we are going to see money printing continue past its potential expiration at the end of June," said Mark Luschini, chief investment strategist of broker-dealer Janney Montgomery Scott with $53 billion assets under management.

"That would likely mean more stimuli and more prospect for inflation, and that's gold friendly," Luschini said.

Spot silver soared to a 31-year peak of $37.34 an ounce, surpassing its previous high set two weeks ago. It later gained 2.6 percent to $37.30 an ounce.

Year to date, silver has gained over 20 percent, and gold was up just over 1 percent. Silver was boosted by near-term supply tightness and strong industrial demand on expectations the global economy continued to recover.