* Silver on track for biggest monthly increase on record * Dollar set for steepest monthly drop in decade * Interactive graphic tracking global spread of coronavirus: open tmsnrt.rs/3aIRuz7 in an external browser (Updates prices) By Eileen Soreng July 31 (Reuters) - Gold rose on Friday and headed for its biggest monthly gain in 8-1/2 years as the impact of the worsening coronavirus pandemic on the U.S. economy hammered the dollar, prompting investors to seek refuge in bullion. Spot gold gained 0.8% to $1,975.10 per ounce by 1207 GMT, while U.S. gold futures rose 1.5% to $1,970.80. Prices hit a record $1,980.57 on Tuesday and are up nearly 11% so far this month, their biggest monthly percentage gain since Jan. 2012. Silver also climbed 3% to $24.25 per ounce, on course for its largest monthly rise on records going back to 1982 - up about 34% - with additional impetus from hopes for a revival in industrial activity. "Gold is more of a store of value right now than pretty much anything else," said Michael Hewson, chief market analyst at CMC Markets UK. The dollar , often seen by investors as a rival safe-haven, was on track for its biggest monthly drop in almost a decade. Its decline makes dollar-priced gold cheaper for holders of other currencies. Along with U.S. data showing the deepest economic contraction in at least 73 years in the second quarter and a rise in unemployment, the dollar was also hurt by President Donald Trump raising the possibility of delaying the November presidential election. "Optimism about a V-shaped recovery is very much at risk and gold is seeing the benefit from that. It's quite likely that we'll see $2,000 an ounce in fairly short order," Hewson said. Gold's latest jump has taken gains for the year to 30%, also driven by low interest rates globally amid widespread stimulus from central banks since the metal is considered a refuge from inflation and currency debasement. Money managers allocated $3.9 billion into gold, the second largest weekly inflow ever, Bank of America said on Friday. Elsewhere, platinum eased 0.1% to $902.28 per ounce, and palladium fell 0.8% to $2,065.87. (Reporting by Eileen Soreng in Bengaluru; Editing by Jan Harvey)
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