* Gold rallies above $1,470/oz, silver breaks above $40/oz
* Dollar slides versus euro after ECB opts to lift rates
* Largest gold, silver ETFs see inflows on Thursday
(Updates prices)
By Jan Harvey
LONDON, April 8 (Reuters) - Gold hit record highs on Friday
and silver its strongest since early 1980 as the dollar slid on
the prospect of a U.S. government shutdown, with euro zone debt
concerns and unrest in North Africa further supporting buying.
Spot gold <XAU=> rose as high as $1,472.96 an ounce and was
bid at $1,470.36 an ounce at 1144 GMT, against $1,457.45 late in
New York on Thursday. Silver <XAG=> was bid at $40.21 an ounce
against $39.51, having earlier risen as high as $40.26.
Friday's slide in the dollar added fuel to a rally that has
already taken gold to a series of record highs this year.
"It is mainly the weaker U.S. dollar which is the driver
today for gold prices," said Commerzbank analyst Carsten
Fritsch. "If the euro-dollar rate rises further, gold will
follow suit."
The euro was buoyed by expectations for further euro zone
rate rises, while the dollar came under pressure from a looming
budget deadlock in the United States. []
Meanwhile, oil climbed to its highest level in 2-1/2 years
as supply cuts stemming from attacks on Libyan oilfields offset
demand concerns spurred by a major aftershock in Japan. []
Libyan rebels said five of their fighters were killed when
NATO planes mistakenly bombed a rebel tank column, and a top
U.S. general said they were unlikely to be able to oust Muammar
Gaddafi by force. []
Gold has hit a series of peaks since January as violence
across the Middle East and North Africa sparked safe-haven
buying and pushed oil prices to multi-year highs.
Expectations euro zone interest rates would rise curbed
gains, but gold broke higher after European Central Bank chief
Jean-Claude Trichet suggested an ECB rate hike announced on
Thursday would not necessarily be the first of a series.
ETFs SEE INFLOWS
Concerns over euro zone debt are also supporting precious
metals. Euro zone finance ministers will discuss Portugal's
bailout plea on Friday, including how much it needs and what
reforms it could do in return. []
"Inflationary concerns and sovereign debt worries in Europe
(are) heightening demand for value store and safe haven
investments," said Fairfax analyst John Meyer in a note.
Meanwhile, interest in gold-backed exchange-traded funds
picked up, with holdings of the largest, New York's SPDR Gold
Trust <GLD>, increasing by just over 11 tonnes on Thursday,
their biggest one-day rise since Jan. 21. []
Holdings of the COMEX Gold Trust <IAU> rose by 260,000
ounces on Thursday, while those of the Sprott Physical Gold
Trust <PHYU.TO> increased by 6.29 percent to 1,024,322.0 ounces
between Wednesday and Thursday. []
Meanwhile, holdings of the largest silver ETF, the iShares
Silver Trust <SLV>, rose to a fresh record at 11,192.8 tonnes on
Thursday. []
Silver is becoming increasingly expensive compared to gold
as prices of both assets rise. The gold:silver ratio -- the
number of silver ounces needed to buy an ounce of gold -- fell
to a 28-year low near 36 on Friday.
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Gold:silver ratio: http://r.reuters.com/myt88r
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Among other precious metals, platinum <XPT=> was at $1,807
an ounce against $1,781.10, while palladium <XPD=> was at
$796.22 against $775.03.
(Editing by Alison Birrane)
