PRECIOUS-Gold set for seventh weekly gain as dollar sags

                                
 * Dollar key driver to strength in gold and silver
                                
 * Coming Up: U.S. personal income mm March; 1230 GMT
                                
 
                                
 (Updates throughout with comment, refreshes prices)
                                
 By Amanda Cooper
                                
 LONDON, April 29 (Reuters) - Gold steadied on Friday, just
shy of fresh record highs and set for its seventh successive
weekly gain, driven largely by the decline in the dollar to its
lowest in nearly three years.
                                
 The dollar fell to its lowest since July 2008 against a
basket of major currencies, after data this week painted a
picture of an economy with slower growth and higher inflation,
and after the Federal Reserve signalled it would not tighten
monetary policy any time soon. 
                                
 An environment of low interest rates, a weak dollar and
accelerating price pressures is usually positive for gold, which
becomes cheaper to non-U.S. investors and can help insulate a
portfolio against inflation.
                                
 Gold's inverse correlation to the U.S. dollar makes it
cheaper for non-U.S. investors and means it draws more strength
from weakness in the greenback. Highlighting gold's dependence
on the dollar is the tepid performance of the metal versus other
major currencies such as the euro <XAUEUR=R>, against which it
has barely moved this week.
                                
 Spot gold <XAU=> was last up 0.1 percent at $1,536.30 an
ounce by 1055 GMT, on course for a 1.8 percent gain this week,
when it hit a record $1,538.35. Trading volumes were restricted
by a public holiday in London.
                                
 
                                
 SILVER HOLDS FIRM
                                
 Meanwhile silver <XAG=> hovered close to its highest in over
31 years, having gained nearly 5 percent this week, although
analysts say its robust performance against the other precious
metals may not be sustainable.
                                
 "The move in gold has been much slower with silver
continuing to outperform," said Saxo Bank manager Ole Hansen.
                                
 "Against the other major currencies the performance year to
date has been pretty flat with euro (priced) gold showing a
negative return of 2.5 percent," he added.
                                
 Silver was last up 0.9 percent at $48.86 an ounce, profiting
also from the softness in the dollar, which fell 0.3 percent
against a basket of currencies. <.DXY>
                                
 "If the dollar continues to weaken, then it's only likely to
boost gold as well as silver as the inverse relationship between
the two assets persists. I would say that for gold I am still
looking for it to hit $1,600 this year," said Ong Yi Ling,
investment analyst at Phillip Futures in Singapore.
                                
 "In the long term, I think, if we see silver prices at such
a high level, then it could hurt the industrial demand."
                                
 But dealers said strong investment demand for silver would
keep the metal at record levels, while a lack of scrap sales in
the physical market suggested that investors expected more
gains. Year to date, silver was up almost 60 percent, sharply
above gold's 8 percent gain.
                                
 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
                                
 For a 24-hour gold technical outlook:
                                
 http://graphics.thomsonreuters.com/WT1/20112904085247.jpg
                                
 For a graphic on silver as best-performing commodity:
                                
 http://r.reuters.com/duj88r
                                
 For SPDR, iShares holdings:                     [GOL/ETF]
                                
 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
                                
 "There's some selling but I would say it's very light," said
a dealer in Singapore, who trades gold and silver. "It had been
a very busy week, and I am glad today is Friday. It's all quiet,
finally."
                                
 The CME Group Inc <CME.O>, parent of the Chicago Board of
Trade, said on Thursday it would raise maintenance margins for
COMEX 5000 Silver <0#SI:> futures by 13.2 percent, making it
more expensive for silver speculators to trade in.
[ID:nL3E7FS62K]
                                
 Soaring prices hurt the bottom line of certain
manufacturers, including photography company Eastman Kodak
<EK.N>, which said on Thursday a hike in raw material costs,
particularly silver, led to a decrease in its film business
revenue. [ID:nN28229826]
                                
 In the energy market, crude eased on Friday, after settling
at a 31-month high in the previous session, on concerns that
slowing growth in top consumer United States may pare demand,
but a weaker dollar and unrest in the Middle East helped stem a
slide in prices. [O/R]
                                
 Platinum <XPT=> echoed the strength in gold and silver,
rising 0.3 percent on the day to $1,841.99 an ounce, while
palladium <XPD=> rose 1.8 percent to $784.47.
(Additional reporting by Lewa Pardomuan in Singapore; editing by
Anthony Barker)