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* Break above $1,892/oz could see more upside in gold - analyst
* Palladium set for first weekly gain in three
* Interactive graphic tracking global spread of coronavirus: https://tmsnrt.rs/3mvcUoa
By Nakul Iyer
Dec 18 (Reuters) - Gold prices retreated on Friday as the dollar rebounded, but were still on track for a third straight weekly gain after a recent rally driven by progress on a U.S. stimulus deal.
Spot gold XAU= dipped 0.3% to $1,880.46 per ounce by 0724 GMT. For the week, it was up 2.3%. U.S. gold futures GCv1 fell 0.2% to $1,886.30 per ounce.
"The U.S fiscal stimulus is more or less priced in...so traders are trying to lock in profit before the weekend," said Margaret Yang, a strategist at DailyFX.
U.S. Congressional lawmakers scrambled to pass a coronavirus aid package on Thursday with both parties saying that failure to reach an agreement was no longer an option. a stimulus deal could spur gold prices higher, a more sustained ascent would require signs of a significant pick-up in inflationary pressures, said FXTM market analyst Han Tan.
The U.S. dollar rose 0.1%, just above a more than two-year trough, dimming gold's appeal to other currency holders. USD/
A break above the $1,892 area with support from a dovish U.S Federal Reserve and a weaker dollar could signal further upside ahead with resistance at $1,910, Yang said.
Analysts also said gold would find support from the Fed's promise to continue its bond-buying programme until "substantial further progress" is seen in restoring full employment and hitting its 2% inflation target. [nL1N2IV1EW
"Given the rising inflation expectations, weakening dollar and lofty valuations in some risky assets, demand for safe-haven inflation hedges should remain supported next year, continuing to push gold towards our $2,300/toz target," Goldman Sachs (NYSE:GS) said in a note.
Potentially escalating geo-political tensions, the United States is set to add dozens of Chinese companies to a trade blacklist on Friday, sources said. XAG= slipped 1.4% to $25.70 an ounce, Platinum XPT= fell 0.7% to $1,036.60 and palladium XPD= eased 0.1% to $2,337.61 but was up 0.7% for the week.