* Gold hits $980 per troy ounce; highest since late Feb
* Dollar hits 5-month lows vs basket of currencies
* Investors sniff chance for rush to $1,000 mark
(Updates prices)
By Jan Harvey
LONDON, May 29 (Reuters) - Gold jumped to a new three-month
high at $980 per ounce on Friday as traders bought the metal as
a hedge against weakness in the dollar, which fell to five-month
lows against a basket of currencies.
Spot gold <XAU=> was up 1.9 percent to $977.60 an ounce at
1605 GMT, compared with $958.80 late on Thursday. U.S. gold
futures for June delivery <GCM9> on the COMEX division of the
New York Mercantile Exchange surged to $982 an ounce, its
highest sice late Febuary.
Analysts said the restablishment of bullion's inverse
correlation with the dollar had put further milestones in view.
"If the dollar continues to be sold, the first obvious
target is $1,006 an ounce, which is the peak we had in February
this year," said Tom Kendall, precious metals strategist with
Mitsubishi Corp.
"That is feasible over the next week or so, if that trend in
the dollar continues."
The U.S. currency extended losses against the euro, yen and
a basket of major currencies, making dollar-priced gold cheaper
for non-U.S. investors [].
In Milan, the World Gold Council's investment research
manager Rosanna Wozniak told Reuters she expected global
investment demand to remain firm throughout the year, though
jewellery and industrial usage would drop. []
SILVER STREAK
Silver prices <XAG=> tracked gold higher to a near 10-month
peak of $15.62 an ounce, the metal's strongest level since
August 8. They were later at $15.55 an ounce against $15.12.
Prices are benefiting from strong investment demand for the
metal, with buying of silver-backed exchange-traded funds
soaring since the beginning of 2009 and speculative net long
positions on the COMEX futures exchange rising.
While industrial and photographic demand for the metal is
lacklustre, investors are buying the metal as a cheap proxy for
gold. It too is being seen as a good portfolio diversifier to
hedge against dollar weakness and inflation.
"This trend (for rising prices) is likely to persist as we
head into the summer months and more `green shoots' offer
additional support to silver's appeal as an industrial metal as
well," said VTB Capital in a note.
Elsewhere, platinum <XPT=> was at $1,182 an ounce against
$1,139.50, having earlier touched a near five-week high of
$1,178.50, while palladium <XPD=> was at $233 against $225.
ETF Securities said holdings of its platinum <PHPT.L> and
palladium <PHPD.L> exchange-traded funds rose on Thursday, by
just under 6,000 ounces and around 5,000 ounces respectively.
Holdings of its three gold-backed ETFs also ticked up nearly
11,000 ounces to 7.477 million ounces, it added.
(Additional reporting by Veronica Brown; Editing by James
Jukwey)
