* Gold on course for best week in four; silver up over 2 pct
* Platinum sets sights on first weekly gain in three
* Palladium heads for first weekly fall in five (Updates settlement prices)
Jan 25 (Reuters) - Gold jumped over 1 percent to a more than a seven-month high on Friday, briefly surpassing $1,300 as the dollar slid ahead of a U.S. Federal Reserve meeting next week where the central bank is widely expected to leave interest rates unchanged.
Spot gold rose 1.3 percent to $1,297.26 per ounce as of 2 p.m. EST (1900 GMT), having earlier touched a peak of $1,300.30, its highest since June 15. The metal was on course for its best week in four.
U.S. gold futures settled up 1.4 percent at $1,298.10 per ounce.
“The major catalyst supporting gold is a big drop in the dollar, amid expectations the Fed will reiterate a pause to its hiking cycle next week,” said Fawad Razaqzada, an analyst with Forex.com.
Gold tends to appreciate on expectations of lower interest rates, which reduce the opportunity cost of holding non-yielding bullion.
The dollar fell off a three-week high reached in the previous session as investors focused on the Fed meeting next week. This made gold, which is traded in dollars, cheaper for holders of other currencies.
“There are also some rumours that the Fed is backing off their quantitative tightening program, which would mean they are going dovish. This would in turn mean a probable end of rate hikes in 2019, which would be supportive for gold,” said Bob Haberkorn, senior market strategist at RJO Futures.
Holdings of SPDR Gold, the largest gold-based exchange traded fund, hovered around their highest levels since late June 2018.
Risks “from economic and political perspectives, are keeping gold relatively well supported going forward,” said Commerzbank analyst Daniel Briesemann.
A global economic slowdown is under way and any escalation in the U.S.-China trade war would trigger a sharper downturn, according to the latest Reuters polls of economists around the world.
Investors are also worried about the impact of the longest U.S. government shutdown in history, with two bills to end the partial shutdown failing to win enough votes in the Senate.
Among other metals, palladium, which hit a record high of $1,434.50 an ounce last week on low inventories and rising demand, gained 3 percent to $1,360.50 but remained on course for its first weekly drop in five, having fallen over 1 percent so far this week.
Silver rose 2.3 percent to $15.66 per ounce, while platinum gained 1.5 percent to $813, on track for its first weekly gain in three. (Reporting by Arijit Bose and Harshith in Bengaluru; Editing by Cynthia Osterman)