Gold up, below 25-year high; silver at 22-year peak

SINGAPORE, Apr 10 (Reuters) Gold rose on Monday but remained below a 25-year peak of 8 an ounce hit last week, while silver gained more than 2 percent to hit new highs not seen in more than 22 years.

Spot gold rose to 2.75/593.50 an ounce from 8.00/588.90 an ounce late in New York on Friday, when the metal hit another multi-year high on buying from funds and investors.

The upside target was pegged around 0 an ounce, a level last seen in December 1980.

''It's certainly looking to test that area,'' said Darren Heathcote, head of trading at N M Rothschild in Sydney.

The price dips attracted buying from investors but it may not be strong enough to push up gold to 0 during Asian trading, said Heathcote, adding that the metal could find stiff resistance at 6.

Investors have turned to the booming commodities markets for investment alternatives to lagging equity, bond and foreign exchange markets, said dealers.

Tensions in the Middle East, uncertainty about the dollar's outlook, worries about rising energy costs and speculation that central banks would diversify into metals have also boosted gold's appeal, they said.

Gold, used in jewellery and investment, has risen around 16 percent percent this year and around 40 percent in the last 12 months.

Benchmark gold futures on the Tokyo Commodity Exchange, currently February 2007, fell 5 yen per gram to 2,281 yen (.34), tracking declines on New York's COMEX.

But dealers said sentiment was bullish in Japan as investors paused for breath after pushing up the contract to 2,294 yen on Friday -- its highest since October 1987.

The physical sector saw a mixture of selling from investors and new buying from fund managers.

''There's short covering and I guess some customers won't wait for the price to come down too much,'' said a dealer in Singapore.

But premiums for gold bars were unchanged at zero to the spot London price in Singapore, suggesting the buying was limited .

Silver surged to .31/12.34 an ounce from .06/12.09 in New York. It had risen to its highest in more than 22 years at .34 an ounce.

The metal has rallied on speculative buying fuelled by hopes for a launch of the first exchange-traded fund, which would trade like listed shares and has the potential to attract 4,000 tonnes of bullion.

The market was awaiting the ETF's final approval from U.S.

regulators.

Platinum rose to ,077/1,082 an ounce from ,065/1,070 late in New York.

Sister metal palladium also rose to 1/356 an ounce from 7/351 an ounce -- its highest since August 2002.

Precious Metals Prices by 0400 GMT* Last Net Change Pct Move Gold 593.60 5.60 +0.95 Platinum 1079.00 14.00 +1.31 Palladium 351.00 11.00 +3.24 Silver 12.31 0.25 +2.07 Change so far in 2006 Metal Latest bid End prev year Pct Move Gold 593.60 517.20 +14.77 Platinum 1079.00 968.00 +11.47 Palladium 351.00 254.00 +38.19 Silver 12.31 8.81 +39.73 * The closing prices used to calculate the net change may differ from New York's last quoted prices.

(=117.92 yen) REUTERS PV BS1136