PRECIOUS-Gold bounces back on softer dollar, US-Iran concerns; silver rebounds

By Anmol Choubey

Feb 6 (Reuters) - Gold rebounded on Friday and was set for a weekly gain, helped by bargain hunting, a slightly weaker dollar and lingering concerns over U.S.-Iran talks in Oman, while silver recovered from a 1-1/2-month low.

Spot gold XAU= rose 3.5% to $4,935.49 per ounce by 11:32 a.m. ET (1632 GMT), recouping losses during a volatile Asia session following Thursday's 3.9% decline. The yellow metal was headed for a weekly gain of about 1.4%.

U.S. gold futures GCcv1 for April delivery gained 1.5% to $4,959.70 per ounce.

The U.S. dollar index .DXY fell 0.2%, making greenback-priced bullion cheaper for overseas buyers. USD/

"The gold market is seeing perceived bargain hunting from bullish traders," said Jim Wyckoff, senior analyst at Kitco Metals.

Iran's top diplomat on Friday said that nuclear talks with the U.S. mediated by Oman were off to a "good start" and set to continue. The remarks could help allay concerns that failure to reach a deal might nudge the Middle East closer to war.

Wyckoff said gold's rebound lacks momentum and the metal is unlikely to break records without a major geopolitical trigger.

Gold, a traditional safe haven, does well in times of geopolitical and economic uncertainty.

Meanwhile, spot silver XAG= rose 6.3% to $75.70 an ounce after dipping below $65 earlier in the session, but was still headed for weekly drop, down over 10.7%, following steep losses last week as well.

"What we're seeing in silver is huge speculation on the long side," said Wyckoff, adding that after years in a boom cycle, gold and silver now appear to be entering a typical commodity bust phase.

CME Group raised margin requirements for gold and silver futures for a third time in two weeks on Thursday to curb risks from heightened market volatility.

Spot platinum XPT= added 4.5% to $2,075.90 per ounce, while palladium XPD= rose 5.3% to $1,702.52.