* Gold hits highest since January 2015 as dollar falls
* Silver set for biggest monthly gain since August 2013
* Palladium reaches strongest since July last year
* GRAPHIC-2016 asset returns: reut.rs/1WAiOSC (Updates prices, adds comment)
By Jan Harvey
LONDON, April 29 Gold and silver prices rallied to their highest since January last year on Friday as the Bank of Japan's decision the previous day to hold off expanding monetary stimulus weighed on stock markets and the dollar.
The yen hit an 18-month peak versus the U.S. currency and was on course for its biggest weekly gain since the 2008 financial crisis, with poor U.S. growth and the Federal Reserve's cautious stance this week weighing on the dollar.
Spot gold was up 1.4 percent at $1,283.20 an ounce at 1400 GMT, having reached a 15-month high of $1,286.36. U.S. gold futures for June delivery were up $19.10 an ounce at $1,285.50.
For the week, the metal is up 4.2 percent in what is set to be its biggest weekly rise since the week ended Feb. 12.
"All the precious metals are up quite strongly on the back of weakness in the dollar, after poor GDP data in the United States and a lack of action by the Bank of Japan," Capital Economics analyst Simona Gambarini said.
"There could be a correction in the price if the dollar starts strengthening again, but we remain positive on gold."
The Fed's policy statement on Wednesday after leaving interest rates unchanged also supported gold. The U.S. central bank kept the door open to an increase in June, but showed little sign it was in a hurry to tighten monetary policy.
Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
Often seen as a sign of broader risk aversion among investors, the strong yen helped pushed Asian and European stocks into the red. Major European stock markets fell more than 1 percent in their biggest drop in over three weeks.
Silver was up 1.7 percent at $17.82 an ounce, having touched its highest since January 2015 at $17.92. The metal has risen 15 percent this month and is on track for its biggest monthly rise since August 2013 as it plays catch-up after lagging gold during its first-quarter surge.
"(Thursday's rally in silver) rounds off four consecutive sessions of higher highs and higher lows, which reinforces our bullish view for the metal," ScotiaMocatta said in a note.
The gold/silver ratio, which measures the number of silver ounces needed to buy an ounce of gold, fell to a six-month low on Friday of 71.8, down from 81.3 at the start of the month.
Platinum was up 2.4 percent at $1,070.42 an ounce, off an earlier 10-month high of $1,075.82, while palladium was up 1.1 percent at $627.97 an ounce.
(Additional reporting by A. Ananthalakshmi in Singapore; Editing by David Evans and Dale Hudson)
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