PRECIOUS-Gold prices set for biggest weekly gain in nearly 2 years

    Feb 16 (Reuters) - Gold prices held firm on Friday to remain
on track for their biggest weekly percentage gain in nearly two
years, buoyed by a weaker U.S. dollar and as investors looked to
hedge against inflation.
    * Spot gold        was largely unchanged at $1,353.51 an
ounce at 0125 GMT, after touching a three-week high of $1,357.08
the session before.
    * The metal is up 2.7 percent so far this week, set for its
strongest weekly performance since the week of April 29, 2016.
    * U.S. gold futures         climbed 0.1 percent to $1,356.2
per ounce.
    * The dollar languished near a three-year low against a
basket of currencies on Friday       , heading for its biggest
weekly loss in nine months, as a slew of bearish factors offset
support for the U.S. currency from rising Treasury yields amid
firming inflation.       
    * U.S. producer prices accelerated in January, boosted by
strong gains in the cost of gasoline and healthcare, offering
more evidence that inflation pressures are building up. The
Labor Department said its producer price index for final demand
rose 0.4 percent last month after being unchanged in December.
    * In a second report on Thursday, the Labor Department said
initial claims for state unemployment benefits increased by
7,000 to a seasonally adjusted 230,000 for the week ended Feb.
    * U.S. President Donald Trump's tax reform will help boost
U.S. growth in the short term but may have negative consequences
such as on the deficit and debt in the medium term, said
International Monetary Fund chief Christine Lagarde.
    * India's trade deficit             in January was the
widest in more than 4-1/2 years as a surge in the country's oil
and coal import bill outweighed a rise in exports, government
data showed on Thursday.             
    * SPDR Gold Trust      , the world's largest gold-backed
exchange-traded fund, said its holdings fell 0.29 percent to
821.30 tonnes on Thursday from 823.66 tonnes on Wednesday.
    * Polyus          , Russia's largest gold producer, posted a
7-percent increase in 2017 adjusted net profit to $1.02 billion,
the company said on Thursday.             
    * Australia's top gold miner, Newcrest Mining Ltd         ,
on Thursday reported a 58-percent fall in half-year underlying
profit, dragged down by disruptions such as an earthquake
hitting one of its key sites earlier in 2017.             

 (Reporting by Eileen Soreng in Bengaluru
Editing by Joseph Radford)