A weaker dollar propels gold to its best week since mid-January

By Ashitha Shivaprasad

March 3 (Reuters) – The price of gold rose to its highest level in almost two weeks on Friday, on track for its biggest weekly rise since mid-January, helped by the falling dollar and expectations investors regarding the monetary policy of the United States Federal Reserve.

* At 09:29 GMT, spot gold was up 0.6% at $1,847 an ounce, its highest level since February 20. So far this week, prices are up about 2%. U.S. gold futures rose 0.6% to $1,852.

* The dollar index is heading for a weekly decline of 0.5%, making bullion – priced at the greenback – more attractive to overseas buyers.

* The gold metal managed to find good support around $1,800 and if it breaks above $1,865 there will be fresh demand, Saxo Bank’s Ole Hansen said.

* “If we see signs of weakness in the economic data and that translates into lower interest rate hike expectations, gold will be favored,” he said.

* Atlanta Fed Chairman Raphael Bostic said Thursday that the impact of rising rates on the U.S. economy may only start to “bite” in earnest in the spring, an argument for the central bank US holds with “steady” quarter-point rate hikes .

*Although gold is known as an inflation hedge, rising rates increase the opportunity cost of holding bullion, which pays no interest and makes it a less attractive bet.

* In other precious metals, spot silver rose 0.9% to $21.08 an ounce, posting its biggest weekly gain since Jan. 13; Platinum added 0.9% to $968.77, on track for its best week since November; and palladium rose 0.2% to $1,452.60.

(Edited in Spanish by Carlos Serrano)