* Palladium on track for worst weekly fall since late
* Platinum, silver heading for biggest weekly gain in five
* GRAPHIC-2017 asset returns: tmsnrt.rs/2jvdmXl
(Updates prices; adds trade and Fed comments, second byline,
NEW YORK datelines)
By Marcy Nicholson and Zandi Shabalala
NEW YORK/LONDON, May 19 Gold rose on Friday and
was on track for its best week in five as the dollar softened on
political turbulence in the United States, boosting bullion's
Spot gold was up 0.6 percent at $1,253.87 an ounce by
2:47 p.m. EDT (1847 GMT), putting it up 2 percent for the week.
U.S. gold futures settled up 0.06 percent at $1,253.60
"We have political turmoil in the U.S. which has driven the
dollar lower... this week's sentiment has supported gold,"
Danske Bank analyst Jens Pedersen said, adding that it was
unclear whether bullion would hold on to the gains into next
Gold is often seen as an alternative investment during times
of geopolitical and financial uncertainty, gaining alongside
bond yields and the yen while stocks usually take a hit.
U.S. President Donald Trump last week fired Federal Bureau
of Investigation Director James Comey. This triggered a
political firestorm that culminated on Wednesday in the Justice
Department's appointment of a special counsel to probe possible
ties between Russia and Trump's 2016 presidential campaign.
The dollar index , which measures the greenback
against a basket of six major currencies, was poised for its
worst week in more than a year while world stocks edged up.
"Political risk is back on again after market participants
became overly complacent following the outcome of the French
elections," Commerzbank analyst Carsten Fritsch said.
"Risk sentiment took a major hit," he said.
New applications for U.S. jobless benefits unexpectedly fell
last week and the number of Americans on unemployment rolls
tumbled to a 28-1/2-year low, pointing to rapidly shrinking
labor market slack.
St. Louis Federal Reserve President James Bullard said the
Fed's expected plans for rate increases may be too fast for an
economy that has shown recent signs of weakness.
"After he spoke, it was enough to push the dollar through
some key levels that brought gold up pretty easily," said Bob
Haberkorn, senior market strategist for RJO Futures in Chicago.
Federal funds futures implied traders saw about a 74 percent
chance the Fed would raise interest rates in June, CME Group's
FedWatch program showed.
Among other precious metals, palladium fell 0.5
percent to $757.97 per ounce. The metal slipped 6 percent this
week and was poised for its biggest weekly fall since late
Platinum rose 0.6 percent to $937.24 an ounce while
silver climbed 1.6 percent to $16.80 an ounce. Both
metals were headed for their strongest week since mid-April.
(Additional reporting by Vijaykumar Vedala in Bengaluru;
Editing by Alexander Smith and Phil Berlowitz)