Silver rises towards 11-month high, set for third weekly gain

By A. Ananthalakshmi

SINGAPORE (Reuters) - Silver edged towards an 11-month top on Friday and was poised for its third straight weekly gain, while gold steadied below a five-week high, helped by a soft dollar and a rally in commodities.

Spot silver rose 0.7 percent to $17.115 an ounce by 0355 GMT, after climbing to $17.695 on Thursday, its highest since May 2015.

It is up 5.5 percent this week in a rally spurred by a break above key chart resistance and optimism over China, where recent data has showed new debt fuelling a recovery in factory activity, investment and household spending.

That in turn boosted gold, which hit a five-week high of $1,270.10 an ounce on Thursday. It was little changed at $1,249.20 on Friday, on track for a 1 percent gain for the week.

"Prices are popping because the dollar is slightly weak. There is also support from the commodities and metals rally," said Dick Poon, general manager at Heraeus Precious Metals in Hong Kong. "The outlook is still positive for both. Gold has a chance to test $1,300 with silver shooting up," Poon said.

The dollar was headed for modest losses for the week against a basket of major currencies. The 19-market Thomson Reuters Core Commodity Index climbed to a 4-1/2-month high on Thursday before giving up gains tracking the dollar.

Other metals used in manufacturing have also risen on hopes of Chinese demand. Copper jumped to a four-week high, while steel soared to a 19-month top on Thursday.

HSBC analyst James Steel, however, said the gold and silver rallies could be running into headwinds.

"For silver, we favour the market above $17, but expect volatility and further gains may be hard to hold. On the positive side, it appears that solar-panel demand is up and retail demand is solid for silver," Steel said, adding that gold may need to consolidate around $1,250 before moving higher.

Among other precious metals, platinum was set to log its best week in seven with a 4 percent rise. It had climbed to a 9-1/2-month high of $1,043.72 an ounce on Thursday.

Palladium was poised for a weekly rise of 7 percent, after climbing to its highest since November on Thursday.

(Reporting by A. Ananthalakshmi; Editing by Himani Sarkar)