PRECIOUS-Gold rises as dollar retreats after Fed downplays inflation fears

* Palladium heads for second straight weekly decline
* Gold eyes second straight weekly gain

(Adds comments, updates prices)
By Sethuraman N R
May 14 (Reuters) - Gold rose on Friday, as the dollar pulled
back from one-week highs after U.S. Federal Reserve officials
downplayed an imminent rise in interest rates despite a sharp
rise in inflation.
Spot gold XAU= gained 0.5% at $1,835.11 per ounce by 1158
GMT. U.S. gold futures GCv1 rose 0.6% to $1,835.30.
The dollar index .DXY was down 0.3% against its rivals,
making gold cheaper for other holders of other currencies.
USD/
"The Fed is not going to throw the economic recovery off
course by raising rates," StoneX analyst Rhona O'Connell said.
"There's too much risk involved to start either aggressive
tapering or raising rates because there is not enough underlying
strength in the economy."
"We have got global issues, and particularly with
uncertainties over places like Brazil and India."
India's tally of coronavirus infections climbed past 24
million on Friday, amid reports that the highly transmissible
variant was spreading across the globe.
Key U.S. economic readings this week showed a
bigger-than-expected rise in consumer prices and weekly jobless
claims dropping to a 14-month low, intensifying concerns over
rising inflation and prospects of a rise in interest rates.
Federal Reserve officials have repeatedly maintained they
expect any rise in inflation to be short-lived.
Fed Governor Christopher Waller on Thursday said the Fed
would not move to raise rates until inflation is above target
for a long time, or excessively high. Meanwhile, Richmond Fed
President Thomas Barkin also downplayed the likelihood of a
long-term jump in inflation. If the Fed sticks to its guns and the initial Fed comments
following publication of the data suggest that is exactly what
it intends to do, gold prices are likely to be pushed up again,
Commerzbank analysts wrote in a note.
Elsewhere, palladium XPD= gained 1.7% at $2,911.55 per
ounce. Silver XAG= rose 0.8% to $27.28 and platinum XPT= was
up 1.7% at $1,226.61.