PRECIOUS-Gold jumps almost 2% on dollar retreat, dovish Fed stance

* Silver on track for 2nd straight weekly gain
* Dollar heads for worst week in a month
* Interactive graphic tracking global spread of coronavirus:
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https://tmsnrt.rs/3aIRuz7 in an external browser

(Adds comment, updates prices)
By Diptendu Lahiri
Aug 28 (Reuters) - Gold rose almost 2% on Friday, on course
for its first weekly gain in three, as the dollar retreated and
the U.S. Federal Reserve's stance reinforced expectations of a
prolonged low interest rate environment.
Spot gold XAU= was up 1.7% at $1,961.11 per ounce by 1149
GMT, taking gains this week to more than 1%. U.S. gold futures
GCv1 rose 1.9% to $1,969.40.
Fed Chairman Jerome Powell on Thursday said the central
bank would adopt an average inflation target - meaning rates are
likely to stay low even if inflation rises a bit in future.
"An environment where interest rates are low and inflation
is gradually picking up works perfectly for assets like gold,"
said UBS analyst Giovanni Staunovo.
"We still expect prices to retest the $2,000 level and even
go up to $2,300. Anything that pushes central banks' monetary
policy towards loosening further could trigger that."
The dollar index .DXY fell 0.7% en route to its worst
week in a month, rendering gold cheaper for investors holding
other currencies. USD/
Silver XAG= , meanwhile, gained 1.9% to $27.56 per ounce,
on track for a second consecutive weekly rise, up 3.3%.
"Low interest rates for longer, a weaker dollar, massive
amounts of stimulus and increased demand for inflation hedges
are likely to continue to drive demand for both (gold and
silver) metals," said Saxo Bank analyst Ole Hansen.
Fading hopes of a quick economic recovery amid the COVID-19
pandemic have compelled central banks to take an accommodative
monetary policy stance, helping gold gain 28% this year, since
lower interest rates decrease the opportunity cost of holding
non-yielding bullion.
"The one event we're looking at is the U.S. elections. If
(Donald) Trump loses and declines to accept the results to stay
in the White House till January, that will be very positive for
gold," said Quantitative Commodity Research analyst Peter
Fertig.
Platinum XPT= rose 0.6% to $934.2 an ounce, while
palladium XPD= climbed 0.6% to $2,174.26.

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