Gold hovered near its two-month highs on Friday as inflation and geopolitical risks underpinned the safe-haven metal, while strong demand for palladium set the autocatalyst on course for its best week since March.

Spot gold eased 0.2% to $1,833.95 per ounce as of 1217 GMT. U.S. gold futures  fell 0.5% to $1,834.10.

"The sentiment remains positive despite the modest correction (in gold) seen this morning. From a technical point of view, the current decline can be called a pullback, a test to the former resistance zone of $1,830," said Carlo Alberto De Casa, market analyst at Kinesis.

Gold has risen about 0.9% this week after prices climbed to a two-month high of $1,847.72 on Thursday as benchmark U.S. 10-year Treasury yields retreated. 

Investor focus is now on the U.S. Federal Reserve's policy meeting scheduled on Jan. 25-26 as it plans to hike interest rates to fight inflation. 

"Apart from inflation concerns, gold prices are benefiting from rising geopolitical tensions, which support safe-haven investment demand," said ANZ analyst Soni Kumari.

Fears that Russia may invade its neighbour Ukraine have kept investors on the tenterhooks. 

While gold is an inflationary hedge, it is also sensitive to rising U.S. interest rates, which reduce the appeal of holding non-interest-bearing bullion.

Spot palladium has rallied more than 10% so far this week and was up about 0.6% at $2,071.19 per ounce. Platinum eased 0.4% to $1,035.57, but was set for its best week since last June.

Both metals are used in emissions-reducing autocatalysts for vehicles.

While demand prospects for Platinum Group Metals look better this year amid growing expectations of improving semi-conductors availability in the second half, prices are likely to remain volatile until chip supply tightness eases, ANZ's Kumari said.

Silver fell 0.3% to $24.36 per ounce, but was still set for its best week in a year with a gain of 6.2%.

(Reporting by Swati Verma in Bengaluru; Editing by Amy Caren Daniel) ((; within U.S. +1 646 223 8780 , outside U.S. +9180 6182 2831/3590; Reuters Messaging: