Gold surged to record highs on Friday after the dollar fell to its lowest point since late 2009 against major currencies, along with silver on the highest position in 31 years, while inflation pressures in China also helped lift bullion's appeal.

China's turbo-charged growth eased just a touch in the first quarter, while its inflation jumped to a 32-month high, putting pressure on the government to do more to rein in prices and keep the economy on an even keel. [ID:nL3E7FF0AC]

Spot gold was steady at $1,472.50 ounce by 0824 GMT, having hit a record high of $1,479.01 an ounce.

Gold is still far below its all-time inflation-adjusted high, estimated at more than $2,000 an ounce set in 1980 as a result of heightened geopolitical pressure and hyper inflation.

"We see gold peaking at $1,500 an ounce. We think there could be some more upside in gold in the short term, especially in this environment of high inflation and rising oil prices," said" Natalie Robertson, commodities strategist at ANZ.

"There is a lot more upside," said Robertson, adding that the peak of $1,500 would be reached by the end of 2011.

Dealers said worries about inflation had spurred steady physical demand from China, where the government has vowed to use all tools at its disposal, including bank reserve requirements, interest rates and the yuan's exchange rate, to wrestle inflation under control. [ID:nL3E7FD1LJ]

Gold's rise to a record only attracted light selling from Thailand and Indonesia, suggesting that investors remained bullish on the outlook. Premiums for gold bars were steady at between 70 cents and $1 an ounce in Singapore.

"Generally, higher consumer prices could still be a boost for gold. Going forward, we will be looking at inflation figures from the United States, and if we see an upside surprise, gold can even go higher," said a dealer in Singapore.

"If you look at recent price action when China announces interest rate hikes, it hasn't affected commodities that much. Also, because of the fact that gold prices are already so expensive, investors are looking at silver as a store of value."

Spot silver rose as high as $42.41 an ounce, its strongest since 1980, with physical dealers in Singapore also reporting buying from speculators.

IShares Silver Trust said its holdings edged up to 10,974.26 tonnes by April 14 from 10,969.71 tonnes on April 13. The holdings hit a record of 11,242.89 tonnes hit on April 8.

The dollar dropped to its lowest in more than a year, under pressure from expectations the U.S. Federal Reserve will not cut short its $600 billion debt-buying programme despite the recent surge in oil prices. [ID:nN14167673]

U.S. consumer price inflation numbers due at 1230 GMT will be closely watched for signs inflation may be rising faster than the Fed may expect.

U.S. gold futures for June rose as high as $1,480.5 an ounce, a lifetime high.

The Singapore Mercantile Exchange (SMX) started trading cash-settled gold futures on Friday, with the contract for June delivery opening at $1,475 an ounce on low volumes.

"They need sufficient liquidity before people start looking at the contracts," said the Singapore-based dealer.

"It's always difficult to get people to adopt a new contract. You'd always stick to traditional, old benchmarks, such as COMEX gold."

Brent crude held steady above $122 a barrel on Friday after China's economic growth beat forecasts despite government efforts to cool expansion and put the brakes on inflation.

Precious metals prices 0824 GMT

Metal             Last    Change  Pct chg  YTD pct chg    Volume
  Spot Gold        1472.50   -0.40   -0.03      3.74
  Spot Silver        41.89   -0.19   -0.45     35.74
  Spot Platinum    1785.00   -1.49   -0.08      0.99
  Spot Palladium    767.97    7.34   +0.96     -3.94
  TOCOM Gold       3943.00  -19.00   -0.48      5.74         2430
  TOCOM Platinum   4808.00  -22.00   -0.46      2.39          361
  TOCOM Silver      111.90   -1.50   -1.32     38.15          175
  TOCOM Palladium  2060.00  -13.00   -0.63     -1.76           40
  COMEX GOLD JUN1  1473.60    1.20   +0.08      3.67        21682
  COMEX SILVER MAY1  41.92    0.25   +0.60     35.47        16768
  Euro/Dollar       1.4457
  Dollar/Yen         83.08
TOCOM prices in yen per gram. Spot prices in $ per ounce.
COMEX gold and silver contracts show the most active months


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