Gold set for second weekly gain as inflation risks boost appeal

  • Silver on track for best week since May 2021
  • Palladium eyes over 12% weekly jump
  • Platinum set for its best week since June

Jan 22 (Reuters) - Gold was set to gain for a second week as inflation and geopolitical risks lifted its safe-haven appeal but it slipped on Friday amid a broader decline in commodities, while palladium was on course for its best week since November 2020.

Spot gold was down 0.4% at $1,831.60 per ounce as of 13:43 ET (1843 GMT). U.S. gold futures settled down 0.6% at $1,831.80.

Silver fell 0.6% to $24.28, but was set for its best week since early May 2021, up about 5.8%.

"The bulls are in control because there is definitely flight-to-safety going into the gold market this week," said Bob Haberkorn, senior market strategist at RJO Futures.

Market focus is now on the U.S. Federal Reserve's meeting on Jan. 25-26, and economists polled by Reuters expect the central bank to tighten policy at a much faster pace than thought a month ago to tame persistently high inflation. read more

The upside momentum of gold could be difficult to maintain ahead of an expected rate hike, which reduces the appeal of holding non-interest-bearing bullion, Standard Chartered analyst Suki Cooper wrote in a note, forecasting prices to average $1,783 per ounce in 2022.

Gold has risen about 0.8% this week, as investors sought cover from worries about a possible extension of U.S. sanctions or new EU measures if Russia attacks Ukraine. read more

Helped in part by a possible supply hit, as Russia is a major producer, palladium rose 2.2% to $2,105.18 per ounce and has rallied about 12.1% this week. Platinum , which fell 0.5% to $1,033.86, was set for its best week since last June.

Potentially boosting autocatalyst demand for palladium and platinum, "passenger car output data suggest that auto production may have passed the trough at the tail end of 2021," Capital Economics wrote in a note.

"Although, with investment in new semiconductor output taking years to bear fruit and the large backlog of orders that has built up, it is highly uncertain when auto output will stage a full recovery."

Precious metal's performance
Reporting by Kavya Guduru and Swati Verma in Bengaluru; Editing by Amy Caren Daniel, Krishna Chandra Eluri and Vinay Dwivedi

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