* Gold up about 0.6% this week
* Silver hits one-year high, set for best week in three years
* Platinum scales two-month peak
* GRAPHIC-2019 asset returns: tmsnrt.rs/2jvdmXl (Adds analyst comments; updates prices)
By K. Sathya Narayanan
July 19 (Reuters) - Gold fell over 1% on Friday as the dollar firmed and investors took profits after prices briefly surpassed $1,450 to hit a six-year peak on dovish signals from the U.S. Federal Reserve and is still on course for a second week of gains.
Spot gold was down 1.5% at $1,424.66 per ounce at 12:05 p.m. EDT (1605 GMT), having touched its highest since early May 2013 at $1,452.60.
Prices have risen about 3% in the past two days and by about 0.6% so far this week on increased expectations for a rate hike by the Fed at its month-end meeting.
U.S. gold futures slipped 0.2% to $1,425.70 per ounce.
“Speculators and traders are taking some profits off the table after the good gains we had in the past two days. Also, there is always a little bit of pressure on gold when the dollar is up,” said Michael Matousek, head trader at U.S. Global Investors.
The dollar was about 0.4% stronger against a basket of currencies, recovering from a sharp fall triggered by dovish comments from Fed policymakers.
On Thursday, New York Fed President John Williams said policymakers cannot wait for economic disaster to hit before adding stimulus, while Fed Vice Chair Richard Clarida said policymakers might need to act early to stimulate the economy as an insurance policy against rising risks.
“Gold is still looking good. The interest rates and dollar environment, uncertainties over the U.S.-China trade war and now the geopolitical situation being the icing on the cake; all of this has created a very supportive environment for gold,” said Mitsubishi analyst Jonathan Butler.
The United States said its Navy had destroyed an Iranian drone in the Strait of Hormuz, while Iran said all its drones had returned to base safely and there was no sign of major escalation in the Gulf.
“With any (geo-political) tensions, we generally have incremental buying for gold. But in today’s price action that is not happening or rather, it is being overpowered” by profit taking, Matousek added.
Elsewhere, silver slipped 1.3% to $16.13 per ounce, after surging to its highest level in more than a year, but was on track for its best week since July 2016, having gained about 6%.
“There is still a good level of demand for silver at the moment with some investors speculating that the gold/silver ratio could fall further, and that a silver trade could potentially allow them to secure more gold in the future,” said See Hong Kang, customer service manager at BullionStar Singapore.
Platinum dipped 0.3% to $846.91 per ounce, after hitting a two-month high, while palladium fell 1.2% to $1,507.44 per ounce. (Reporting by K. Sathya Narayanan; Additional reporting by Arpan Varghese in Bengaluru; Editing by Susan Thomas and Will Dunham)