Sept 17 (Reuters) - Gold leapt to a record high on Friday as a weaker dollar and growing speculation of further quantitative easing by the U.S. Federal Reserve prompted a flurry in investment buying.

Photo: AFP/File/Sebastian Derungs

Sister-metal silver was supercharged, benefiting also from gains in prices for industrial metals to test the $21 mark. A break above $21.24 would open the way for prices to hit levels last seen in October of 1980. .

Spot gold hit an all-time high of $1,282.75 a troy ounce before easing to a bid at $1,280.10 by 1037 GMT, compared with $1,272.20 late in New York on Thursday. It has gained more than $100 or 8.4 percent since the start of August.

Tom Kendall, analyst at Credit-Suisse said the dollar has been a major driver behind gold's recent run. The dollar .DXY fell against a basket of currencies, hurt by growing talk of more quantitative easing from the Fed next week.

"Physical has fallen away in terms of fresh flow from the Middle East, Turkey, India, but ...there has been a bit of short-covering coming through from scrap players, alongside the momentum buying," Kendall said.

Quantitative easing is a process by which central banks attempt to pump money into economies by printing money and buying bonds. Excess liquidity can often lead to price pressures as too much money chases too few goods and services.

A lower U.S. currency makes dollar-denominated commodities cheaper for holders of other currencies. Investors use gold as a store of value during times of high inflation or financial market turmoil.

Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust (GLD.P) were flat overnight at 1,294.746 tons having fallen the day before. But earlier this week the number rose by more than 6 tons.

SEASONALLY STRONG

Later on Friday the market will see inflation data from the United States, which could impact the dollar and expectations of potential moves by the U.S. Federal Reserve.

September and October are typically seasonally strong periods for jewelry demand, with a number of small gold-buying festivals in major consumer India, while Western manufacturers stock up ahead of Christmas.

Lending background support this week however, was news of AngloGold Ashanti's (ANGJ.J) capital raising, a key function of which was to buy back its outstanding gold hedge.

"They've raised the capital, but I haven't heard any strong rumors (that they have bought any gold)," said analyst Robin Bhar of Credit Agricole.

Spot silver was bid at $20.87 an ounce from $20.72 in New York on Thursday. Expectations of stronger growth in the final few months of this year has helped boost industrial precious metals platinum, palladium and silver.

However, silver is according to technical analysis, overbought and could be due a correction.

"Silver is renowned for overshooting and undershooting, so this rally can get more exponential but we are already up 18 percent since late August," Kendall said.

"In my opinion, that kind of rate of increase can't be sustained. I would not be recommending anyone to get long or longer silver at $21."

Spot platinum hit $1,622 an ounce, its highest since May 19. It was last at $1,622 from $1,603.65 on Thursday and palladium was bid at $548.00 an ounce from $544.65.

(Editing by James Jukwey)