Gold leapt to a record high on Friday as a weaker dollar and growing speculation of further quantitative easing by the US Federal Reserve prompted a flurry in investment buying. Sister-metal silver was supercharged, benefiting also from gains in prices for industrial metals to test the USD 21 mark. A break above USD 21.24 would open the way for prices to hit levels last seen in October of 1980. Spot gold hit an all-time high of USD 1,282.75 a troy ounce before easing to a bid at USD 1,280.10 by 1037 GMT, compared with USD 1,272.20 late in New York on Thursday. It has gained more than USD 100 or 8.4% since the start of August. Tom Kendall, analyst at Credit-Suisse said the dollar has been a major driver behind gold's recent run. The dollar fell against a basket of currencies, hurt by growing talk of more quantitative easing from the Fed next week. "Physical has fallen away in terms of fresh flow from the Middle East, Turkey, India, but ...there has been a bit of short-covering coming through from scrap players, alongside the momentum buying," Kendall said. Quantitative easing is a process by which central banks attempt to pump money into economies by printing money and buying bonds. Excess liquidity can often lead to price pressures as too much money chases too few goods and services. A lower US currency makes dollar-denominated commodities cheaper for holders of other currencies. Investors use gold as a store of value during times of high inflation or financial market turmoil. Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust were flat overnight at 1,294.746 tonnes having fallen the day before. But earlier this week the number rose by more than 6 tonnes. SEASONALLY STRONG Later on Friday the market will see inflation data from the United States, which could impact the dollar and expectations of potential moves by the US Federal Reserve. September and October are typically seasonally strong periods for jewellery demand, with a number of small gold-buying festivals in major consumer India, while Western manufacturers stock up ahead of Christmas. Lending background support this week however, was news of AngloGold Ashanti's capital raising, a key function of which was to buy back its outstanding gold hedge. "They've raised the capital, but I haven't heard any strong rumours (that they have bought any gold)," said analyst Robin Bhar of Credit Agricole. Spot silver was bid at USD 20.87 an ounce from USD 20.72 in New York on Thursday. Expectations of stronger growth in the final few months of this year has helped boost industrial precious metals platinum, palladium and silver. However, silver is according to technical analysis, overbought and could be due a correction. "Silver is renowned for overshooting and undershooting, so this rally can get more exponential but we are already up 18% since late August," Kendall said. "In my opinion, that kind of rate of increase can't be sustained. I would not be recommending anyone to get long or longer silver at USD 21." Spot platinum hit USD 1,622 an ounce, its highest since May 19. It was last at USD 1,622 from USD 1,603.65 on Thursday and palladium was bid at USD 548.00 an ounce from USD 544.65.

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