* Dollar leaps to 16-month high
* Silver set for best week in three
* Platinum en route to biggest weekly rise in 1-month
Nov 12 (Reuters) - Gold prices eased on Friday due to a firmer dollar but were on track for their biggest weekly gain in six months as concerns over soaring U.S. consumer prices boosted the metal’s appeal as an inflation hedge.
Spot gold fell 0.2% to $1,857.84 per ounce by 0625 GMT, after hitting a five-month peak on Wednesday. U.S. gold futures eased 0.1% to $1,861.30.
The dollar index soared to its highest since July 2020, pressuring bullion by increasing its cost to buyers holding other currencies.
But the metal is still on track for its biggest weekly gain since May 7, after U.S. consumer prices recorded their sharpest jump in over 30 years last month.
“Until supply chains open up, there’s going to be continued price pressure and this should support gold,” said Stephen Innes, managing partner at SPI Asset Management.
The sharp rise in inflation also prompted investors to boost bets that the Federal Reserve will raise interest rates sooner than expected.
Gold prices can rise for a while as prolonged supply chain issues might lead to longer-lasting inflation, and interest rate hikes may not keep pace with it, Innes said, adding that a rate-hike cycle should ultimately push bullion lower.
Higher interest rates increase the non-yielding metal’s opportunity cost.
Gold should trend lower than $1,850 in the short term as the positive sentiment from the Fed’s gradual tapering and additional flow of stimulus funds wears off, said Michael Langford, a director at corporate advisory AirGuide.
Spot silver eased 0.1% to $25.22 per ounce but was en route to its best week in three.
Platinum fell 0.2% to $1,083.67, but was on course for its biggest weekly rise in a month. Palladium dropped 0.4% to $2,049.66.
(Reporting by Nakul Iyer in Bengaluru; Editing by Rashmi Aich and Ramakrishnan M.)