* Gold on path for second straight weekly gain
* Platinum sees best week since early Jan
* Palladium set for third straight weekly gain
By Karthika Suresh Namboothiri
Feb 22 (Reuters) - Gold inched up on Friday as optimism over
U.S.-China trade talks pressured the dollar, but signs that the U.S.
Federal Reserve could raise interest rates again this year kept prices
below a 10-month high hit earlier this week.
Spot gold rose 0.3 percent to $1,326.56 per ounce as of 0814
GMT. The metal was headed for a second straight weekly rise, up almost
0.4 percent this week.
U.S. gold futures were up 0.1 percent at $1,329.1 per ounce.
"The dollar's trajectory and soundings from the Fed will
obviously play on gold prices, but the metal's focus is now more on
key levels than key events," said Ronan Manly, a precious metals
analyst at BullionStar Singapore.
"The main target is still the technically important area
between $1,350 and $1,360 above which would be a one year high."
The dollar index against a basket of six major currencies was
set to decline about 0.3 percent this week, which could be its biggest
weekly fall in a month. The U.S. unit has been under pressure on hopes
of a U.S.-China trade deal.
U.S. and Chinese negotiators resumed high-level talks on Thursday
to hash out a deal that could end their trade war, just over a week
before a U.S.-imposed deadline.
"On a day to day basis gold is a function of changing
currency markets and the U.S. dollar. Medium outlook is a lot more to
do with geopolitical issues and yields" said Kyle Rodda, a market
analyst with IG Markets.
"But the fact that it was overbought-driven very much by a
new yield environment, tensions around the world especially around
geopolitics, is keeping gold prices elevated."
Gold had hit a 10-month high of $1,346.73 on Wednesday, but
minutes from the Fed's January policy meeting indicated there might in
fact be a rate hike this year, erasing gains in gold.
"Dovish signals from U.S. Federal Open Market Committee
officials for the shorter term have kept global equities steady whilst
applying bearish pressures on the non-interest bearing asset,"
Phillip Futures said in a note.
Higher interest rates reduce investor interest in non-yielding bullion.
Indicative of investor sentiment toward bullion, holdings of SPDR
Gold Trust , the world's largest gold-backed exchange-traded fund,
dropped 0.63 percent to 789.51 tonnes on Thursday.
Elsewhere, palladium gained nearly 1 percent to $1,480.96 per
ounce, having surpassed the key $1,500 level for the first time on
The autocatalyst metal was on track for a third straight week of
gains, up nearly 3 percent.
Platinum rose 0.4 percent to $822.50, and was set for its best
week since early January. Silver was up 0.6 percent to $15.90. It
was poised to snap two consecutive weekly losses.
(Reporting by Karthika Suresh Namboothiri in Bengaluru; Editing by
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