* Gold, silver hit 7-week highs on dollar slide
* iShares silver ETF at record; investment interest high
* Platinum, palladium helped by stronger global car sales
(Recasts, updates with quotes, closing prices, adds NEW YORK
dateline/byline)
By Frank Tang and Jan Harvey
NEW YORK/LONDON, Aug 3 (Reuters) - Gold and silver futures
rose to seven-week highs on Monday as a weaker dollar, better
physical demand and fresh buying from commodity funds boosted
investors' appetite for hard assets amid a Wall Street rally.
Economic optimism should provide underlying support to
bullion, which had been weighed down heavily this year because
of deflation fears, but the direction of the U.S. currency will
ultimately set the tone for the yellow metal.
"There is new money coming into everything. Stronger
equities and commodities are reflecting that. Of course, the
dollar continues to weaken, and that is the driving force right
now," said Bill O'Neill, managing partner of New Jersey-based
LOGIC Advisors.
U.S. December gold futures <GCZ9> settled up $3 at $958.80
an ounce on the COMEX division of the New York Mercantile
Exchange. They hit a session peak of $966.90 an ounce, the
highest price since June 10.
Spot gold <XAU=> was at $956 an ounce at 2:38 p.m. EDT
(1838 GMT), up from $953.90 an ounce late in New York on
Friday.
The dollar fell broadly as a rally in stocks and
encouraging economic data eroded the greenback's safe-haven
appeal. U.S. Treasuries prices also slipped. []
"At the moment we're seeing the dollar as the key factor to
movements in the gold market," said Eugen Weinberg, senior
analyst at Commerzbank. "In the past few months (gold) has gone
from being a safe haven to becoming a dollar play."
Bullion was also boosted by inflation worries stirred by a
sharp rise in the U.S. stock market. The S&P 500 index rose
above the 1,000 level for the first time in nine months as
investors welcomed fresh indications that the recession is
abating.
Positive manufacturing reports from the United States,
Europe and China lifted hopes about the global economy and
boosted risk appetite.
Better economic sentiment also boosted silver's industrial
demand component, traders said.
Silver <XAG=> was at $14.25 an ounce against $13.89.
Earlier it touched a high of $14.47, the highest price since
mid-June.
SILVER INFLOWS
Silver took further support from fresh inflows into
exchange-traded funds last week.
The largest silver ETF, the iShares Silver Trust, said its
holdings rose to a record 8,828 tonnes on Friday, while
Switzerland's Zurich Cantonal Bank said its silver holdings
rose by 1.929 million ounces, or 3.8 percent, last week.
Investment demand for gold and jewelry buying remain
lackluster, however. Holdings of the largest gold ETF, the SPDR
Gold Trust, fell nearly 50 tonnes in July. []
ETFs issue securities backed by physical commodities, and
constituted a big source of gold demand in the first quarter.
Among other precious metals, platinum <XPT=> was at $1,234
an ounce, against $1,207.50, while palladium <XPD=> was at
$270.50, against $261.50. Both metals are used in
autocatalysts.
General Motors Co [] said on Monday its U.S. auto
sales fell 19.4 percent in July from a year earlier, but retail
sales rose from the month before for a fifth consecutive month,
supported by the U.S. government's "Cash for Clunkers"
incentives. European car sales also posted gains in July.
(Additional reporting by Catherine Bosley and Pratima Desai in
London; Editing by Walter Bagley)
Close Change Pct 2008 YTD
Chg Close Pct Chg
US gold <GCZ9> 958.80 3.00 0.3 884.30 8.4
US silver <SIU9> 14.252 0.312 2.2 11.295 26.2
US platinum <PLV9> 1239.70 25.50 2.1 941.50 31.7
US palladium <PAU9> 274.60 10.00 3.8 188.70 45.5
Prices at 2:46 p.m. EDT (1846 GMT)
Gold <XAU=> 956.15 2.25 0.2 878.200 8.9
Silver <XAG=> 14.23 0.34 2.4 11.30 25.9
Platinum <XPT=> 1234.00 26.50 2.2 924.50 33.5
Palladium <XPD=> 270.50 9.00 3.4 184.50 46.6
Gold Fix <XAUFIX=> 959.75 20.75 2.2 836.50 14.7
Silver Fix <XAGFIX=> 14.290 0.660 4.8 14.760 -3.2
Platinum Fix <XPTFIX=> 1215.00 0.00 0.0 1529.00 -20.5
Palladium Fix <XPDFIX=> 268.00 0.00 0.0 365.00 -26.6
