By Jan Harvey
LONDON (Reuters) - Silver hit an 11-month high on Thursday as the dollar retreated, boosted by perceptions the metal had become undervalued versus gold and by technical momentum, while gold rallied more than 1 percent ahead of a European Central Bank meeting.
Silver is up more than 7 percent this week, and on track for its biggest weekly rise since January 2015 after a break of key chart resistance last week sparked a wave of buying.
It reached its most expensive versus gold in six months on Thursday, with an ounce of gold buying 72.3 ounces of silver, against a more than seven-year high of 83 ounces in late February.
Spot silver was up 2.6 percent at 1130 GMT at $17.37 an ounce, having touched $17.60, its highest since May 2015.
Gold was up 1.2 percent at $1,258.66 an ounce, while U.S. gold futures for April delivery were up $6.30 an ounce at $1,260.70.
"Silver has most certainly been developing its own strong momentum, the way it has rallied and outperformed gold," Saxo Bank's head of commodities research Ole Hansen said. "Gold has been 'saved' this time round by silver, as demand has slowed."
Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Shares, has seen outflows of 14 tonnes so far this week, while silver ETF holdings have surged.
"(Silver) could potentially be running out of steam ahead of the 17.80 high from last year, and that could lead trigger some profit taking," Hansen said. "The strength of the market will be determined by whether $16.80 will be strong enough to cap the correction once it starts."
Bullion traders are now awaiting the outcome of an ECB meeting later in the session for any impact on the dollar, in which the precious metals are priced. The ECB is not expected to make any policy changes at its rate-setting meeting.
"ECB President (Mario) Draghi will probably present details of the recently decided measures," Commerzbank said in a note. "In addition, he will keep all options open as regards the future monetary policy of the ECB. If he shows himself more open to possible further rate cuts, this is likely to support gold."
The euro was up 0.2 percent against the dollar ahead of the meeting. The focus will also be on U.S. economic data that could affect the Federal Reserve's monetary policy.
Among other precious metals, spot platinum was up 1.5 percent at $1,030.85 an ounce and spot palladium was up 0.5 percent at $596.44 per ounce.
(Additional reporting by A. Ananthalakshmi in Singapore; editing by David Evans and Jason Neely)
