UPDATE 1-Sterling-priced gold hits record 828.60 pounds/oz

* Inconclusive election result knocks pound, UK assets

* Bullion benefits from flight to quality

* Sterling gold builds on biggest 1-day rise since Jan. 2009

(Adds detail, background, comment)

LONDON/SINGAPORE, May 7 (Reuters) - Sterling-priced gold hit
record highs on Friday as political uncertainty in Britain
knocked the pound, with investors awaiting the outcome of the
country's hotly-fought general election.

The precious metal XAUGBP=R hit a peak of 828.60 pounds an
ounce early on Friday, having soared 5.5 percent in the previous
session, its biggest one-day percentage rise since Jan. 2009.

Traders cited uncertainty over the outcome of the general
election and fears linked to persistent sovereign debt problems
elsewhere in Europe as key drivers of the rally.

"People tend to buy gold when they see trouble ahead, or
when trouble hits, and right now you have both of those," said
Adrian Ash, head of research at online gold dealer the
BullionVault. "Gold thrives on fear and uncertainty."

"People will typically buy gold because they don't want to
be in other things," he said. "Right now, for sterling
investors, there aren't many other places which look like being
a sound and stable store of wealth for the near term."

The pound tumbled, Britain's leading share index extended
this week's hefty losses and gilt futures reversed on Friday as
an inconclusive election outcome unnerved investors already
rattled by Europe's mounting debt crisis. [ID:nLDE6460I9]

Britain's opposition Conservatives won the biggest share of
seats after Thursday's poll, but were set to fall short of a
majority, leaving the UK set for a hung parliament.

"With uncertainty over the shape of the new government and
therefore economic policy likely to continue into next week, the
(UK) currency should remain on the back foot, with GBP/USD set
to test $1.4500 at some point," said Credit Agricole in a note.

If the pound stays under pressure, sterling-priced gold is
likely to set further new highs, dealers said.
(Reporting by Lewa Pardomuan in Singapore and Jan Harvey in
London; editing by Clarence Fernandez/James Jukwey)