* Silver on track for 2nd straight weekly gain
* Dollar heads for worst week in a month
* Spot gold may rise to $1,966 per ounce - technicals
* Interactive graphic tracking global spread of coronavirus: open https://tmsnrt.rs/3aIRuz7 in an external browser (Recasts, adds comment, updates prices)
By Brijesh Patel
Aug 28 (Reuters) - Gold rebounded nearly 1% on Friday as the dollar retreated and investors latched onto dovish policy signals from U.S. Federal Reserve Chairman Jerome Powell.
Spot gold XAU= was up 0.9% at $1,946.55 per ounce by 0650 GMT after declining 1.3% on Thursday. It has gained nearly 0.4% so far in the week after two straight weeks of losses. U.S. gold futures GCv1 rose 1.1% to $1,954.10.
Prices see-sawed between a 1% gain and a 2% decline on Thursday in the run-up to, and following, Powell's speech. announcement by Powell that the Fed will likely tolerate some inflation above the 2% target is indicative that monetary policy will remain dovish, which should provide support for gold," said National Australia Bank economist John Sharma.
Gold benefits from lower interest rates, as they decrease the opportunity cost of holding the non-yielding bullion and weigh on the dollar.
The dollar index .DXY fell 0.4% against its rivals and was on track for its worst week in a month, making gold cheaper for investors holding other currencies. USD/
Rising coronavirus cases have cast a shadow on hopes of a quick economic recovery and prompted central banks to reduce interest rates and loosen their monetary stance, helping gold prices climb 28% so far this year. on Thursday showed the number of Americans filing new claims for unemployment benefits hovered around 1 million last week, suggesting the labour market recovery was stalling as the pandemic drags on. remains positioned to the upside as concerns over the global economy remain, according to a note from Fitch Solutions.
Spot gold may rise to $1,966 per ounce, as its bounce from Wednesday's low of $1,902.22 seems to be extending, said Reuters technical analyst Wang Tao. TECH/C
Silver XAG= gained 1.3% to $27.40 per ounce and was on track for a second consecutive weekly rise, up 2.3%.
Platinum XPT= rose 0.4% to $932.58, while palladium XPD= climbed 1.1% to $2,184.21.
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