* Gold on track for biggest weekly gain in five
* Palladium set for biggest weekly gain since Sept. 21
* GRAPHIC-2018 asset returns: http://tmsnrt.rs/2jvdmXl (Updates prices)
By Swati Verma and Karthika Suresh Namboothiri
BENGALURU, Nov 16 (Reuters) - Gold rose as much as 1 percent on Friday as the dollar fell after U.S. Federal Reserve officials made cautions comments on the outlook for interest rate hikes, while palladium hit a record high driven by worries about short supplies.
Spot gold XAU= rose 0.7 percent to $1,221.60 an ounce by 13:52 p.m. EST (1852 GMT). The session high was the highest since Nov. 8 at $1,225.29. Gold has gained over 1 percent so far this week, its best in five weeks.
U.S. gold futures GCv1 settled up $8, or 0.7 percent, at $1,223.
Two Fed officials cautioned that global economic growth was slowing. The dollar fell to one-week lows against a basket of major currencies .DXY , making bullion cheaper for buyers in other currencies. USD/
"When you get people talking about the economy slowing down, they may not raise rates so quickly or as aggressively and that is bearish for the dollar," said INTL FCStone analyst Edward Meir.
Weaker global stock markets and lower U.S. Treasury yields gave another leg for gold. MKTS/GLOB US/
"A weaker dollar and lower yields are pretty much tailor made to benefit gold," said James Steel, chief metals analyst at HSBC Securities in New York, who sees prices rising to $1,245-$1,250.
Palladium XPD= climbed 1.4 percent to $1,172.49 an ounce, up more than 5 percent this week. The metal hit a record high of $1,185.40 earlier in the session, within a whisker of parity with gold for the first time in 16 years. market is in a big deficit. There is a lot of fund interest in palladium because the funds like to buy something when its moving... But the supply is of concern now," INTL's Meir said.
Used mainly in emissions-reducing auto catalysts for vehicles, palladium, the only precious metal on track for an annual gain, was also helped by speculation Beijing may provide a stimulus to Chinese auto markets.
"In the medium to longer term, I do not think these price levels are sustainable ... also assuming we do get some sort of stimulus in China that pulls more and more demand into the present and weighs on the future demand outlook for the Chinese car market," said Julius Baer analyst Carsten Menke.
Car dealers in the world's biggest car market have been pushing for Beijing to support the sector. XAG= rose 0.7 percent to $14.38 an ounce, on course for a weekly gain of over 1 percent.
Platinum XPT= was up 0.5 percent at $844.90, but was down slightly for the week.
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