PRECIOUS-Gold edges higher; set for worst week in over 2 mths on dollar strength
Adds comments, details, updates prices
By Sumita Layek
Feb 5 (Reuters) - Gold inched up on Friday, recovering from a more than two-month low hit in the previous session, but the precious metal was set for its biggest weekly drop since end-November pressured by a firmer dollar.
Spot gold XAU= rose 0.1% to $1,794.11 per ounce by 0247 GMT. Prices fell over 2% to their lowest level since Dec. 1 on Thursday.
For the week, gold was down 2.8%, on track for its biggest weekly decline since the week ended Nov. 27.
U.S. gold futures GCv1 gained 0.2% to $1,794.70.
"There is some technical rebound as investors think last night's drop was overdone, but still overall trend in gold remains bearish biased on rising dollar and Treasury yields," said DailyFX strategist Margaret Yang.
The dollar was set for its best week in three months, while longer-term U.S. Treasury yields rose. USD/US/
"The economic outlook is definitely brighter with vaccines bringing down the daily COVID-19 infections, and the macro data is improving, undermining the demand for precious metals as a store of value" Yang said. nL1N2K92L7nL4N2AY3AS
However, the passage of President Joe Biden's $1.9 trillion COVID-19 aid will underpin gold. nL1N2KA1PF
"Gold is about to endure some serious short-term pain," Jeffrey Halley, a senior market analyst at OANDA said, adding, gold's role as an inflation hedge will return as the economic recovery starts accelerating by late second-quarter.
Spot silver XAG= shed 0.1% to $26.27, and was set to end the week lower at 2.6%, hurt by the recent volatility in the market, which also took prices to a near eight-year peak of $30.03 briefly on Monday. nL8N2K84DQ
"Silver's fate will be similar to gold and I expect it to retest $22 over the next two weeks, although it will find some support through Biden's solar push," Halley said.
Platinum XPT= lost 0.1% at $1,095.93 an ounce and palladium XPD= gained 0.6% to $2,296.23.
(Reporting by Sumita Layek in Bengaluru; Editing by Krishna Chandra Eluri and Rashmi Aich)