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PRECIOUS-Retail mania propels silver prices to near 8-year peak

* Physical silver demand more than doubled since Thursday - dealer

* Gold-silver ratio falls to multi-year low (Adds comment, updates prices, adds graphic)

Feb 1 (Reuters) - Silver rallied for a third straight session on Monday, soaring as much as 11.2% to a near eight-year peak as retail investors in Asia followed up frenzied buying by U.S. counterparts last week following a social media-led call to push the market higher.

Spot silver jumped 8.7% to $29.36 an ounce by 0831 GMT, having earlier hit its highest since February 2013 at $30.03.

Both a safe-haven asset and an industrial metal, silver has risen nearly 19% since Thursday when posts began circulating on Reddit urging individual investors to buy silver mining stocks and exchange-traded funds (ETF) backed by physical silver bars, in a GameStop-style squeeze.

“This is Asia’s response” to all the retail mania, Brian Lan, managing director at GoldSilver Central said.

Demand for physical silver has more than doubled since Thursday, as investors who were on the sidelines bought the metal on worries that prices will shoot up, Lan said.

Data from iShares Silver Trust ETF, the largest silver-backed ETF, showed silver holdings in the trust jumped by a record 37 million shares from Thursday to Friday alone, each representing an ounce of silver.

ETF investments boost silver prices as the operator has to buy more metal to back them. Total silver holdings by all major ETFs surged to a record 912 million ounces last week, compared to just over 600 million a year ago. Analysts expect the market to stay volatile in the near term, and some see prices testing $35 to $38 an ounce.

However, “once the storm calms, prices will come back to normal levels around $26-$27” and remain supported on strong fundamentals, said Jigar Trivedi, commodities analyst at Mumbai-based broker Anand Rathi Shares.

Silver was among the top performing assets last year with a near 50% gain and is expected to extend that run this year backed by favourable policies in the U.S.

Spot gold jumped 0.8% to $1,860.45. U.S. gold futures gained 1% to $1,868.60.

Experts caution that gold’s relatively subdued performance suggests that silver’s rally may not last long.

“Given the gold-silver ratio is at a multi-year low, we see limited room for further outperformance of silver,” said Soni Kumari, commodity strategist with ANZ.

Platinum rose 4.2% at $1,118.04 and palladium gained 1.4% to $2,257.20.

Reporting by Sumita Layek in Bengaluru, additional reporting by Swati Verma; Editing by Rashmi Aich, Gavin Maguire and Louise Heavens

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