PRECIOUS-Gold recovers from 7-month low but on course for weekly drop

(Updates prices)
* Platinum looks set to post third weekly gain
* U.S. dollar eyes second straight weekly loss

By K. Sathya Narayanan and Shreyansi Singh
Feb 19 (Reuters) - Gold prices edged higher on Friday,
recovering from a more than seven-month low hit earlier as the
U.S. dollar eased, but rising Treasury yields kept bullion on
course for its biggest weekly drop since early January.
Spot gold XAU= was up 0.3% at $1,780.86 per ounce by 02:17
p.m. EST (1917 GMT), after falling to its lowest since July 2 at
$1,759.29 earlier.
The safe-haven metal was down about 2.4% so far this week,
its biggest weekly drop since the week of Jan. 8.
U.S. gold futures GCv1 settled up 0.1% at $1,777.40.
"The drop in the U.S. dollar has likely driven gold higher,"
said Bart Melek, head of commodity strategies at TD Securities,
adding the move could also be technical in nature.
The dollar .DXY was down 0.3% against key rivals and
looked set to post its second straight weekly loss. USD/
"(However), the problem (for gold) continues to be the
yields, and we continue to see rates across the curve move
higher," Melek added.
Benchmark U.S. Treasury yields US10YT=RR rose to a near
one-year high earlier. US/
While gold is seen as an inflation hedge, higher inflation
expectations have pushed yields up, increasing the opportunity
cost of holding non-yielding bullion.
Gold should still benefit from continued loose monetary
policy and low real interest rates this year, analysts said.
Commerzbank analysts said in a note that gold's behaviour
resembled that of a tsunami, with prices receding in the first
phase before coming back all the more violently.
Autocatalyst metal platinum XPT= edged 0.2% higher to
$1,277.18 an ounce and was set to post its third straight weekly
gain, having risen to a more than six-year peak earlier in the
week.
Palladium XPD= rose 1.1% to $2,376.58 an ounce.
Silver XAG= rose 0.8% to $27.25, but was set to register a
weekly loss.