* Gold up 1.6% so far this week
* Dollar on track for a weekly loss
* SPDR Gold Trust holdings rose 0.6% on Thursday
* Platinum set for second straight weekly decline
(Recasts, adds comments, updates prices)
By Brijesh Patel
May 21 (Reuters) - Gold fell on Friday, as optimism around a
rebound in the U.S. economy lifted appeal for riskier assets,
but a weaker dollar and growing inflationary pressure limited
losses and kept bullion on track for a third straight weekly
gain.
Spot gold was down 0.3% at $1,871.50 per ounce by
0253 GMT, but it has risen 1.6% this week. U.S. gold futures
fell 0.6% to $1,871.
"U.S. economic data has given us strong inflation alerts
this week, meaning yields and the dollar have fallen, strong
supportive factors for gold," OANDA senior market analyst
Jeffrey Halley said.
"Today it looks like a short-term dip, absent other factors,
rather than a fully fledged turn in direction. Additionally, I
believe that upward trading momentum has increased for gold as
investors now believe that prices have made a structural low."
The dollar was pinned near milestone lows against its rivals
and was headed for a weekly loss, while benchmark 10-year
Treasury yields fell.
Recent data showing a rise in prices in the United States
and the UK intensified concerns over inflation, lifting gold's
appeal as an inflation hedge.
Indicative of sentiment, holdings of SPDR Gold Trust ,
the world's largest gold-backed exchange-traded fund, rose 0.6%
to 1,037.09 tonnes on Thursday.
However, risk sentiment in wider financial markets remained
upbeat fuelled by hopes around a quick economic recovery,
limiting demand for safe-havens'.
Data on Thursday showed the number of Americans filing new
claims for unemployment benefits dropped further below 500,000
last week.
Britain's economy will grow much faster than expected this
year, as a rapidly moving coronavirus vaccine programme allows
businesses to re-open and lifts confidence, a Reuters poll
found.
Palladium fell 0.9% to $2,826.22 per ounce, silver
eased 0.3% to $27.65. Platinum edged 0.1% higher
to $1,197.51, but it was on track for its second straight weekly
fall.
(Reporting by Brijesh Patel in Bengaluru; Editing by Rashmi
Aich)
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