PRECIOUS-Gold faces worst week in 10; silver set for weekly decline
By Sumita Layek
Feb 5 (Reuters) - Gold gained on Friday, recovering from a more than two-month low hit in the previous session, although prices were set for their biggest weekly drop since end-November as the dollar firmed.
Silver headed for its worst week in three after retreating sharply from multi-year highs hit earlier this week on the back of increased interest from retail traders.
Spot gold XAU= rose 0.3% to $1,796.77 per ounce by 0622 GMT, after falling over 2% to their lowest since Dec. 1 on Thursday. U.S. gold futures GCv1 gained 0.3% to $1,797.
The yellow metal notched a weekly fall of 2.6%, its biggest such decline since the week ended Nov. 27.
"There is some technical rebound as investors think Thursday's drop was overdone, but overall trend in gold remains bearish on rising dollar and yields," said DailyFX strategist Margaret Yang.
The dollar was set for its best week in three months, while 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
"Gold is about to endure some serious short-term pain," Jeffrey Halley, a senior market analyst at OANDA said, adding that gold's role as an inflation hedge will return as the economic recovery starts accelerating by late second-quarter.
Spot silver XAG= rose 0.4% to $26.40 an ounce, but was down 2.1% for the week. Prices have dropped about 12% since scaling a near eight-year peak of $30.03 on Monday.nL8N2K84DQ
"Silver's fate will be similar to gold and it can retest $22 over the next two weeks, although it'll find some support through Biden's solar push," Halley said.
Platinum XPT= added 0.6% at $1,104.15 and palladium XPD= gained 1% to $2,305.21. Both metals were headed for their best week in five.
(Reporting by Sumita Layek in Bengaluru; Editing by Krishna Chandra Eluri, Rashmi Aich and Devika Syamnath)