PRECIOUS-Gold set for weekly gain as central banks defer rate hikes

(Recasts, adds technicals and updates prices)

* Investors focus on U.S. nonfarm payrolls due later in the day

* Palladium set for 1st weekly rise in four

* Gold prices should retreat in 2022 as economy recovers- ANZ

Nov 5 (Reuters) - Gold prices were on track for a weekly gain on Friday as the U.S. Federal Reserve and the Bank of England stood pat on interest rates despite growing inflationary risks, increasing the appeal of non-yielding bullion.

Ultra-loose U.S. monetary policy has helped drive gold sharply higher since the financial crisis of the late 2000s, with low interest rates cutting the opportunity cost of holding non-yielding assets.

Spot gold was up 0.3% at $1,796.64 per ounce, as of 0714 GMT, and gained 0.8% so far in the week. U.S. gold futures climbed 0.3% to $1,798.20.

The Fed said on Wednesday it will begin paring its monthly bond purchases with plans to end them in 2022, but stuck to its long-held view that high inflation would prove “transitory” and likely not require a fast rise in interest rates.

The decision prompted benchmark 10-year U.S. Treasury yields to retreat from recent highs of around 1.6%.

Given the Fed’s view and inflationary pressures, gold should find some support at current levels, ANZ analysts said in a note. “Still, we expect prices to retreat in 2022 as economic recovery develops.”

A day after the Fed’s decision, the Bank of England kept interest rates on hold, wrong-footing investors who had been convinced that it would be the first big central bank to raise rates since the pandemic.

“A lot of investor interest is still mainly in equity markets, and until gold breaks above $1,835, it might not have enough momentum to attract strong interest,” Nicholas Frappell, a global general manager at ABC Bullion said.

Spot gold may test a resistance at $1,798 per ounce, a break above could lead to a gain into $1,807-$1,814 range, according to Reuters technical analyst Wang Tao.

Investor focus has now shifted to U.S. nonfarm payrolls data due at 1230 GMT.

Spot silver rose 0.3% to $23.85 an ounce and platinum gained 0.7% to $1,032.96.

Palladium climbed 1.6% to $2,032.30 and was on course for its first weekly gain in four. (Reporting by Nakul Iyer in Bengaluru; Editing by Ramakrishnan M. and Sherry Jacob-Phillips)