PRECIOUS-Gold edges up as weaker dollar counters rate jitters

* U.S. weekly jobless claims drop to 14-month low
* Palladium heads for second straight weekly decline
* Dollar down 0.1%, still on track for weekly rise

(Adds comments, details, and updates prices)
By Shreyansi Singh
May 14 (Reuters) - Gold prices edged higher on Friday due to
a pullback in the dollar, though gains were curbed as data
showing a rise in U.S. inflation fanned fears of a
sooner-than-expected rate hike.
Spot gold XAU= was up 0.2% at $1,829.61 per ounce by 0626
GMT. U.S. gold futures GCv1 rose 0.2% at $1,827.40.
The metal traded flat for the week.
The dollar index .DXY was down 0.1% against its rivals,
making gold cheaper for other currency holders. USD/
"Inflation is not necessarily bad for gold, however, it's
bad if the central banks start to act on it, and the market is
getting a little bit jittery thinking that this could bring
forward the U.S. Federal Reserve's taper a little bit," said
Stephen Innes, managing partner at SPI Asset Management.
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.
Higher interest rates increase the opportunity cost of
holding bullion.
"Right now we haven't had any inclination that the Fed is
about to move anytime soon, I think gold still remains
relatively supported," Innes said, adding that strong economic
data still remains a key concern.
The U.S. central bank has pledged to keep interest rates low
until the economy reaches full employment, and inflation is on
track to "moderately" exceed the 2% level for some time.
"We'll need some more clarity in terms of how
persistent inflation is. If it turns out to be transitory,
yields will remain lower," said Harshal Barot, a senior research
consultant for South Asia at Metals Focus.
Investors now await U.S. retail sales data due later in the
day.
Elsewhere, palladium XPD= gained 1.8% to $2,914.28 per
ounce. Silver XAG= rose 0.1% to $27.09, while platinum XPT=
was up 0.9% at $1,216.69.