Gold hits one-week high as dollar softens; palladium near record

By Sumita Layek and Swati Verma

BENGALURU (Reuters) - Gold rose to a one-week high on Friday as the dollar softened, while palladium held near a record high close to the price of bullion.

The surge in palladium, used as an emissions-reducing auto catalyst for vehicles, reflected speculative buying driven by expectations of increased demand in a tight market, analysts said.

Spot gold was up 0.3 percent at $1,216.11 an ounce by 1309 GMT, having touched its highest since Nov. 9 at $1,218.33.

U.S. gold futures gained 0.2 percent to $1,216.9.

"Investors are a bit more interested in gold ... the momentum is up, we may go to $1,250 in the short term," said ABN AMRO analyst Georgette Boele.

The dollar eased to 96.76 against a basket of major currencies after British Prime Minister Theresa May clung to her Brexit plan despite the resignations of senior ministers. [USD/]

A weaker dollar makes bullion cheaper for holders of other currencies.

"Gold should continue to find demand on dips, provided the U.S. dollar remains in check," Stephen Innes, APAC trading head at OANDA in Singapore, said in a note.

The greenback has emerged as a dominant safe-haven asset this year on the back of a U.S.-China trade dispute, denting the appeal of gold, which has fallen 11 percent from an April peak.

Palladium edged 0.3 percent higher to $1,160.55 an ounce, having hit a record high of $1,178.30 in the previous session. It was on track for its biggest weekly gain since Sept. 21, up more than 4 percent since the start of the week.

Palladium is the only precious metal on track for a gain for the year.

"Prices are mainly driven by speculative traders and trend followers in the futures market, partly due to expectations of stimulus in China," said Julius Baer analyst Carsten Menke.

"In the medium to longer term, I do not think these price levels are sustainable ... also assuming we do get some sort of stimulus in China that pulls more and more demand into the present and weighs on the future demand outlook for the Chinese car market."

Car dealers in China have been pushing for Beijing to support the sector, including a proposal to cut the purchase tax on some smaller cars.

Silver was down 0.2 percent at $14.25 an ounce, on course for a weekly gain of about 1 percent. Platinum fell 0.6 percent to $836, down more than 1 percent so far this week.

(Reporting by Sumita Layek, Swati Verma and Arpan Varghese in Bengaluru; Editing by Dale Hudson and David Goodman)