SINGAPORE (Reuters) - Gold rose to its highest in nearly three decades on Friday as a struggling U.S. dollar lifted its safe-haven appeal and purchases from speculators helped the metal defy selling pressure.

Not to be outdone, silver rose to its highest in more than three months, platinum hit its best level since early May and palladium touched a five-week high.

Spot gold rose as high as $739 an ounce, its loftiest level since January 1980, on a combination of short-covering and technical buying. It later dipped to $737.15/737.85 an ounce, still higher than $734.20/735.00 late in New York.

"At this point, we are seeing quite strong investor interest in gold," said David Moore, a commodity strategist at the Commonwealth Bank of Australia in Sydney.

"If the U.S. dollar continues to edge lower against other currencies, then I think you will see a continued support for gold."

Gold spiked to a life-time high of $850 in January 1980 as high inflation linked to strong oil prices, Soviet intervention in Afghanistan and the impact of the Iranian revolution prompted investors to buy the precious metal heavily.

Crude oil held near $82 a barrel on Friday after touching a record $84 the previous day as a tropical depression forced the shutdown of Gulf of Mexico output and triggered supply fears ahead of peak winter fuel demand.

Gold is generally seen as a hedge against oil-led inflation.

It hit an intraday low of $732.30 an ounce earlier on Friday as investors booked profits on a rally that has added more than $90 an ounce in a little over a month.

"The oil price is over $80 today. As we approach the end of this year, the gold price will follow oil and reach $800," said Yukuji Sonoda, precious metals analyst at Daiichi Commodities in Tokyo.

Fundamentals looked strong, with gold miners globally reducing their hedges, the United States cutting interest rates and consumption in main buyer India expected to reach more than 1,000 tones this year, he said.

India's demand for gold reached 715.5 tones in 2006, the World Gold Council said.

The most active gold futures contract for August 2008 delivery on the Tokyo Commodity Exchange hit a high of 2,747 yen per gram, its highest since August 1985, before ending 27 yen higher at 2,746 yen.

"There's some profit taking but it looks like the Japanese still show interest to buy. I am looking at the next target of $750," said a bullion dealer in Hong Kong.

"I don't know whether we are going to touch that level this month because I am sure people will take profit on higher prices, but I would say we will eventually see $750," he said.

The most-active December gold contract on the COMEX division of the New York Mercantile Exchange rose $5 to $744.9 an ounce on electronic trade, after hitting another 28-year high at $747.1 an ounce.

The dollar hit a 31-year low against the Canadian dollar and edged near a record low against the euro as investors dumped the U.S. currency after the Federal Reserve surprised markets with a half-point rate cut earlier this week.

The euro inched up to $1.4091 nearing $1.4099 hit on Thursday -- the highest since the single European currency was launched in 1999.

Against a basket of currencies, the U.S. currency was at 78.537, near a 15-year low of 78.450 hit on Thursday and approaching a life-time low of 78.190.

Comments from Fed Chairman Ben Bernanke that global financial losses stemming from disarray in the U.S. subprime mortgage market has "far exceeded even the most pessimistic estimates" put further pressure on the dollar.

"The market may find support $710 and I think $750 will be the upside. There might be a final push to squeeze up the shortlists," said a dealer in Singapore.

"People are buying momentum and slowly covering back their shorts. I guess a strong Canadian dollar is also a factor because it's a commodity-related currency," he said.