* Gold on track for second weekly fall
* Silver set for biggest weekly fall in nearly three months
* Platinum hits four-month low (Recasts throughout, updates prices; adds comment, secondbyline NEW YORK to dateline)By Renita D. Young and Eric OnstadNEW YORK/LONDON, April 27 (Reuters) - Gold edged higher onFriday after the dollar and U.S. Treasury yields backed offhighs, but the prospect of a Korean denuclearisation deal erodedbullion's safe-haven appeal.Spot gold gained 0.4 percent at $1,321.81 per ounceby 1:37 p.m. EDT (1737 GMT). U.S. gold futures for Junedelivery settled up $5.50, or 0.42 percent, at $1,323.40 perounce.
"The combination of the dollar retreating and the U.S.Treasury yields retreating below 3 percent is giving gold aboost," said Walter Pehowich, executive vice president ofinvestment services at Dillon Gage Metals.U.S. 10-year Treasury yields , the benchmark ofglobal interest rates, retreated further from the 3 percentlevel they initially hit on Wednesday.A rise in U.S. bond yields typically pressures gold byreducing the attractiveness of non-yielding bullion, which ispriced in dollars.However the softer U.S. Treasury yields and dollar, and golddropping to a key support level sparked buying, said Bart Melek,head of commodity strategy at TD Securities in Toronto."We bounced off the technical level 100-day moving average,which was $1,320 and we just moved above it, primary because therates in the U.S. moderated a little bit."
While the U.S. dollar's gains extended, the move was mutedagainst a basket of major currencies.Gold was on track to finish the week nearly 1 percent downfor its second consecutive weekly decline and the biggest weeklydrop in four.
The leaders of South and North Korea embraced after pledgingon Friday to work for the "complete denuclearisation of theKorean peninsula". "We have the pictures from the meeting of the two Koreanleaders today, showing geopolitical hotspots have calmed downmassively, so there's scant argument to be bullish on gold atthe moment," said Carsten Fritsch, commodity analyst atCommerzbank in Frankfurt.Silver dropped 0.2 percent at $16.45 an ounce. It isdown more than 3 percent this week, the biggest weekly dropsince the week ending Feb. 2.Platinum was down 0.9 percent at $913.90 an ounceafter touching $900.50, its weakest since Dec. 18. It was headedfor a nearly 1 percent weekly decline.Palladium lost 1.5 percent at $970.22 an ounce,poised for a nearly 6 percent weekly drop. It had rallied nearly10 percent since U.S. sanctions were imposed on Russian entitieson April 6. Russia is the world's biggest producer of palladium. (Reporting by Renita D. YoungEditing by Chizu Nomiyama)
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