Spot silver surged more than 5 percent to top US$49 an ounce yesterday, moving closer to its 1980 all-time peak lifted by a weak dollar and strong physical demand in Asia that also sent gold to a record high for a seventh consecutive session.

Spot silver was heading for its biggest daily gain in five months, hitting a 31-year high of US$49.31 an ounce.

Spot gold hit a record high of US$1,518.10 an ounce, before easing to US$1,517.05. United States gold futures hit an all-time high at US$1,518.60.

"Everyone is buying," said a Hong Kong-based dealer. "There is stop-loss buying, as well as a good buying interest from China."

US silver futures jumped 8.2 percent to US$49.82 an ounce in unusually large trading volume, just about 50 US cents off its lifetime peak of US$50.35 on January 18, 1980.

Silver prices have climbed nearly 60 percent this year, after jumping more than 80 percent in 2010.

That has outpaced gold's 7 percent rise and a 10-percent gain in the 19-commodity Reuters-Jefferies CRB index and drawn investors big and small to silver.

Holdings in the largest silver-backed exchange-traded fund, iShares Silver Trust, have risen by 2.4 percent this year, while holdings in SPDR Gold Trust, the world's top gold ETF, have declined by 4 percent.

Buying interest in physical silver has also jumped in India, where gold is traditionally favored.

"The rally has been great as traders are buying silver like mad," said an official at a private bank in India.

"We normally don't import silver on a regular basis, but we imported about 10 tons from last month. Investors are joining in the rally in India to catch on the price appreciation."

"It's the dollar play," said a dealer based in Singapore.