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LONDON, Mar 17 (Reuters) Gold took advantage of a soft dollar in Europe on Friday to push higher, while silver reached a fresh 22-year high amid hopes a proposed exchange-traded fund (ETF) will be launched soon, traders said.

Spot silver, up some four per cent this week, hit $10.40 an ounce, beating the previous 22-year peak of $10.37 set on Wednesday. It was quoted at $10.40/10.42 an ounce from $10.31/10.34 late in New York.

''It continues to eye upside resistance pegged at $10.50 as ETF speculation continues,'' James Moore of the BullionDesk.com said.

Investors have bought silver, used in jewellery, photography and electronics, on hopes the U.S. Securities and Exchange Commission will soon approve an ETF from Barclays Global Investors.

ETFs are designed to reflect closely the price of an underlying market or commodity, such as a stock index or gold, and they trade like listed stocks on any exchange.

Robust performances were seen in other precious metals, led by gold. Physical buying on recent price dips has prevented gold from declining much further than the $548/550 an ounce level, with the market capitalising on the dollar as well.

The euro was at $1.2166 after earlier hitting $1.2194 -- its highest since late January. A weaker dollar makes it cheaper to buy dollar-denominated gold.

''Gold is back up there -- we're looking at it testing this area of resistance between $556 and $560,'' a trader said.

Spot gold was quoted at $555.50/556.25, unchanged from levels late in New York on Thursday.

The market was hovering near Wednesday's one-week high of $556.90, with the next major target above current levels pegged at $570. After that the objective was the 25-year peak of $574.60 hit in early February.

''The longer-term outlook remains bullish as inflation, geo-political instabilities and supply/demand imbalances look set to propel the metal to $600.00 later in the year,'' Moore added.

DOLLAR NEAR SEVEN-WEEK LOW The dollar was near a seven-week low against the euro after a soft inflation report on Thursday suggested the Federal Reserve's tightening campaign could be drawing to a close.

A government report showed core inflation, which strips out food and energy costs, as measured by the consumer price index rising just 0.1 per cent in February, compared with expectations of a 0.2 per cent rise.

''We find that capital flows trends are once again moving against the dollar, which could prove fortuitous in providing yet another leg to this gold price rally,'' broker Deutsche Bank said in its latest weekly report.

Platinum was at $1,030/1,034, against a previous $1,025/1,030, while palladium stood at $311/316, versus a previous $310/314.

REUTERS SD ND1922