Gold hits new high on econ worries, weak dollar

By Rujun Shen

SINGAPORE (Reuters) - Gold surged to a new record and silver struck a new 2-½ year high on Friday on investor concerns over global economic prospects, while a weak dollar helped boost sentiment.

Spot gold hit a high of $1,280.1 an ounce, before easing to $1,279.2 by 0600 GMT, on course for a 2.9-percent rise from a week earlier, the sharpest in more than 3 months.

"Uncertain economic prospects, especially in the U.S., have helped gold continue to hit record highs," said Hou Xinqiang, an analyst at Jinrui Futures in China. "Even though prices have gone higher, bullish sentiment in the market is still intensifying."

Data out of the U.S. on Thursday showed an improved job market, while factory activity in the Mid-Atlantic continued to contract in September , albeit at a slower pace.

The euro rose to a one-month high against the dollar, with dealers citing buying from real money investors, or long-term investors such as pension funds and life insurers.

"Gold in recent times has been tracking the fortunes of the euro," said Darren Heathcote, head of trading at Investec Australia in Sydney. "Given that the euro has appreciated by a big figure against the U.S. dollar, it wasn't surprising to see gold not only test the $1,275 level but break through it."

"As we are trading gold around that number now, the momentum is very positive for potential testing of $1,300 in the next few days."

U.S. gold futures for December delivery rose 0.6 percent to $1,280.9 an ounce.

Technical analysis showed that spot gold could rise to $1,286 an ounce as per a flag and pennant pattern, according to Wang Tao, a Reuters market analyst.

Gold premium in Hong Kong was unchanged after it hit a record for a second time this week, at a premium of between 50 to 70 cents to spot London prices.

"There is not much scrap around these days. Selling is not too aggressive, unless the ETF turned around," said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong .

"Only if interest rates were raised, people's attitude towards gold would change from bullish to bearish. But for the near term, we don't see anything."

Spot silver vaulted to a 2-1/2-year high of $20.94 an ounce, and softened to 20.88, heading for a 5.7-percent weekly gain.

The gold/silver ratio, used to measure the ounces of silver needed to buy an ounce of gold, has been on a steady decline since late August. It stood at a nearly 8-month low of 61.27, way below the average of 64.38 over the past 28 years.

Spot platinum hit an intraday high of $1,617.5, within sight of a near 4-month peak of $1,618 hit in the previous session. Platinum is on course for a weekly gain of 5 percent, the sharpest in 8 months.

Palladium gained 1.4 percent to $552.5 an ounce, poised for a 7-percent gain from a week earlier, the biggest since late June.