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U.S. gold futures soar above $780; silver outpaces

 NEW YORK, Oct 26 (Reuters) - Gold futures in New York surged
above $780 an ounce early on Friday as commodity funds and investors
aggressively added positions amid a falling dollar and crude oil
rally.
 Silver contracts also surged above $14 on pent-up demand and
support from technical charts.
 "There is good buying coming in here, all because of the currency
situation. The dollar again being hit, and the energies are up huge.
Also, the turmoil in Iraq and Turkey is setting up oil and we are
following it," said Joseph Guzzardi, a floor trader at Sabin
Commodities in New York.
 At 10:07 a.m. EDT (1407 GMT), most-active December gold GCZ7 on
the COMEX division of the New York Mercantile Exchange was up $11, or
1.4 percent, at $782.00 an ounce, trading between $771.80 and
$784.50.
 The dollar fell to record lows against the euro and a basket of
currencies on Friday as investors, faced with a run of weak U.S.
economic data, anticipated a Federal Reserve interest rate cut next
week.
 Oil rallied to a record high above $92 a barrel on Friday as the
dollar tumbled to a record low, Washington imposed new sanctions on
Iran and gunmen shut more oil production in Nigeria. U.S. crude
CLZ7 hit a fresh record high of $92.22 in early sessions.
 Gold is used by investors as a hedge against inflation, while a
lower dollar makes gold, which is denominated in the greenback,
cheaper for holders of other currencies.
 "If the dollar fall continues and oil remains strong, gold will
likely trade towards $800 an ounce irrespective of positioning," John
Reade, head of precious metals strategy of UBS in London, told
clients in a note.
 Reade said there had been a distinct lack of profit taking in
gold. He had recently warned that a record high in speculative net
long positions in the futures market could prompt a correction in
bullion before prices could rise further.
 Rising geopolitical tensions because of Turkey's military
operation in northern Iraq to expel Kurdish rebels and United States'
rhetoric on Iran also boosted gold's safe-haven attribute.
 Meanwhile, bullion used to back StreetTRACKS Gold Trust GLD.N,
the world's biggest gold exchange-traded fund, climbed to a record
597.53 tonnes on Friday. XAUEXT-NYS-TT However, the tonnage growth
of the gold ETFs has slowed in October, analysts said.
 SILVER OUTPACES GOLD
 Meanwhile, silver outpaced gold's gains for a second straight
day. COMEX December silver SIZ7 was up 31.5 cents, or 2.2 percent,
at $14.220 an ounce, trading between $13.950 and $14.270.
 "Silver is also strong. Silver's been lagging over the last few
weeks or about a month or so. It's going to pick up also," Guzzardi
said.
 Other traders also cited chart-based support for the white metal.
Unlike gold, silver has a strong industrial-demand component, and its
price tends to be far more volatile than gold bullion.
 Spot bullion XAU= traded at $778.20/778.70, compared with the
Thursday New York close at $767.90/768.70. London bullion dealers
fixed the morning spot reference price at $775.60.
 Spot silver XAG= was quoted at $14.14/14.18, higher than
Thursday's late New York quote of $13.86/13.91. London silver was
fixed at $14.07.
 In mining news, South African cities, mines and metal smelters
were hit by power cuts on Friday after utility Eskom [ESCJ.UL] could
not supply nearly a quarter of its normal power requirements,
officials said. [ID:nL26424728]
 NYMEX January platinum PLF8 gained $9.30 to $1,463.00 an ounce.
Spot platinum XPT= was quoted at $1,454/1,458.
 December palladium PAZ7 was up $5.45, or 1.5 percent, at
$374.95 an ounce. Spot palladium XPD= fetched $369/373.






















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