NEW YORK, June 21 (Reuters) - COMEX gold ended a strong week by muscling toward its 2002 highs Friday, as the dollar continued its nosedive and as nail-biting over economic recovery and global instability kept hard assets in vogue.
After starting sluggishly while market players were glued to the United States-Germany World Cup soccer match, August gold came back to life after America lost 1-0 and, coincidentally, the dollar hit a new two-year low at $0.9722 per euro.
Meanwhile, the Dow Jones industrial stock average was down about 100 points near the close.
The benchmark August contract settled up $1.40 at $325.10, its fourth straight gain, trading $322.80-$325.80. Estimated volume was 27,000 lots.
"I guess a lot of people were watching the TV, and had nothing to do after the game was over so they bought gold," joked Edward Jette, head of gold, energy and commodities for Westdeutsche Landesbank Girozentrale.
"We are basically playing the euro, yen and dollar against gold and there seems to be additional fund movement from equities looking for alternative investments," said Jette. "The new alternative investment seems to be gold."
Fund managers were encouraged to keep buying by gold's resilience in the face of long liquidation since contract and 2-1/2 year highs were hit above $330 an ounce two weeks ago.
Open interest rose 3,170 contracts to 172,068 on new buying during Thursday's $3.40 rally. Total uncovered long and short positions are still down from the recent peak near 200,000 contracts.
The CFTC said in its Commitments of Traders report late Friday that speculators were net long 41,241 contracts (128 tonnes) last Tuesday, down from 46,456 a week earlier.
Spot gold was last quoted at $324.40/90, up from $323.10/3.60 at Thursday's close. Friday's late fix by London bullion dealers was $322.70.
Friday's speculative buying was reinforced by "Indoeurasian" physical demand, Jette said.
Investors stampeded into gold this year -- lifting prices some 15 percent -- fleeing the dollar and U.S. equities amid jitters about earnings, corporate accounting, economic recovery and hot spots like the Middle East and the Indian subcontinent, as the United States wages its war on terror.
"There was really nothing going on of any nature except gold was strong due to the dollar weakness. It's the same old story," said Leonard Kaplan, president of Prospector Asset Management. "The gold market is still recovering from being taken out in the alley and being beaten up pretty badly the last couple of weeks."
July silver fell 1.5 cents to $4.855 an ounce, trading from $4.905 to $4.825. Volume was 13,000. Spot silver was at $4.84/86, off from $4.86/88 at the close and $4.88 at the fix.
The net noncommercial silver long fell to 44,655 contracts from 50,192 contracts on June 11.
NYMEX July platinum fell $6.40 to $562.70 an ounce, retracing from a contract high at $572 hit Wednesday. Spot platinum was at $560/565.
September palladium fell $4.65 to a contract low at $328 an ounce. Spot palladium fetched $325/335.
Commission house sell stops were triggered against the old NYMEX low at $330 from Tuesday. "The funds have been aggressive, aggressive sellers against this $333-$338 level from last week," said Ralph D'Esposito of RJ Futures. "Open interest is up significantly. So they were anticipating this break as well."
"On balance, this market is going to be groping for some sort of a bottom at these levels," he said.