LONDON, Feb 14 Gold jumped just over one percent on Wednesday, notching up a new seven-mo

LONDON, Feb 14 (Reuters) Gold jumped just over one percent on Wednesday, notching up a new seven-month high when the dollar fell further after comments by the U.S. Federal Reserve Chairman Ben Bernanke.

Spot gold hit a peak of $671.85 an ounce but attracted selling and had slipped back to $669.75/670.50 by 1546 GMT, up from $664.00/664.70 late in New York.

''The final push in gold came on the back of the euro/dollar move after Bernanke said that there are signs that inflation pressures are starting to ease,'' one dealer said.

Silver broke back above $14 to its highest since early December.

Renewed dollar weakness and a bounce in oil prices were seen as the main short-term drivers in gold. Restrained mine production and geopolitical tensions were also cited as supportive background factors that have drawn investors back to the market.

Gold is up $70, or 11.5 percent, since early January.

''(We) have been calling for a weaker U.S. dollar for some time, mine production is really constrained and with decent investment demand coming in, you could expect gold to push back towards the highs of May last year,'' David Thurtell, metals analyst with BNP Paribas, said.

Output of gold in the world's biggest producer South Africa fell 12.4 percent in volume terms year on year in December 2006.

Gold has had several failed attempts to regain a 26-year high hit in May 2006 at $730. Its all-time high was $850 in January 1980.

Thurtell noted forward selling from gold miners reappearing as prices started to reach the high $600s and above. He also noted, however, aggressive buying of call options on Tuesday at $800 and $1,000 -- giving the holder the option to buy at these heady levels.

Analysts say the interest rate differential between Europe and the United States will be a key factor for gold prices.

Strong economic growth data from several European countries on Tuesday cemented expectations that the European Central Bank would raise rates again this year, which would have a negative impact on the dollar and so boost gold.

The euro rose to $1.3126 an ounce after Bernanke said price pressures were starting to ease, boosting chances of an interest rate cut later in the year.

''We feel confident in looking for a push through to $680-$700 over the next 2-3 months,'' JP Morgan said in a commodity market outlook note.

The bank did echo concerns voiced by other traders and analysts about the significant build in speculative net long positions that made the market vulnerable to a set-back.

''Howver, sentiment remains robust, gold remains attractive thematically and technically it has a solid profile.'' Flows into gold and silver exchange-traded funds have continued to rise so far this year. Holdings in the five main listed products for gold are up 2.6 percent to nearly 620 tonnes, while silver holdings are up 3 percent to 3,889 tonnes.

Silver rose to $14.01/14.06 an ounce from $13.86/13.91 late in New York.

Platinum rose to $1,210/1,215 an ounce, from $1,197/1,202 in New York. Palladium rose to $343/348 an ounce from $337/342.

REUTERS KR DB2140