* Gold hits $980 per ounce; highest level since late Feb
* Dollar hits 5-month lows, oil rises to 2009 peak
* Canada's Claymore says fund buys 345,000 oz gold
(Recasts, updates prices, market activity to close; new byline
dateline, previously LONDON)
By Frank Tang
NEW YORK, May 29 (Reuters) - Gold futures rose above $980
an ounce on Friday to end near a three-month high as a growing
appetite for risk flushed investors out of the dollar and into
bullion and other commodities.
Gold prices climbed more than $20 this week amid signs the
recession could be easing, and oil rallied to its highest level
of 2009 while the dollar plunged to five-month lows.
Investors view gold as insurance against the falling value
of their dollar-denominated portfolios. The inverse
relationship between gold and the dollar broke down early this
year as both assets benefited from a flight to safety.
"I think the combination of a sector-wide commodities rally
plus a weaker dollar has made gold moving. We have substantial
inflows into the commodity sector, most prominently in oil,"
said James Steel, chief commodities analyst at HSBC.
U.S. August gold futures <GCQ9> settled up $17.10, or 1.8
percent, at $980.30 an ounce on the COMEX division of the New
York Mercantile Exchange. August hit a high of $982, the
highest level since Feb. 25.
Spot gold <XAU=> traded at $976.80 an ounce at 2:13 p.m.
EDT (1813 GMT), versus Thursday's last quote of $958.80 in New
York. Gold peaked at $980 an ounce.
Buying sentiment among gold investors got a big boost on
news that Canada's Claymore Investments Inc said it has bought
345,000 ounces (10.7 tonnes) of gold bullion in conjunction
with the launch of its gold bullion fund. []
"There was new buying came in to buy gold as an asset class
out of Canada," said Frank Holmes, chief executive of U.S.
Global Investors Inc, which manages over $2 billion in mutual
fund assets.
SILVER STREAK
Silver prices <XAG=> tracked gold higher to a near 10-month
peak of $15.63 an ounce, the metal's strongest level since
August 8. It was at $15.61 an ounce, up 3.2 percent from its
previous finish of $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
lackluster, 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 $1,187.00 an ounce, up
4.2 percent from its late Thursday quote of $1,139.50, having
earlier touched a near five-week high of $1,197.50, while
palladium <XPD=> was at $232.50 an ounce, up 3.3 percent from
its previous finish of $225.
(Additional reporting by Jan Harvey and Veronica Brown;
Editing by David Gregorio)
