PRECIOUS-Gold, palladium bounce back as markets stabilise

Sumita Layek

(Updates prices, adds comments and details)

* Palladium on track for worst week on record

* Silver slides 3%, platinum eyes biggest weekly fall since 2010

* GRAPHIC-2020 asset returns: http://tmsnrt.rs/2jvdmXl

March 13 (Reuters) - Gold gained 1% on Friday, supported as financial markets showed signs of stabilisation after a deep sell-off driven by concerns over the coronavirus, but bullion was still set for its worst week in more than three years. Palladium also bounced more than 11%, after plummeting nearly 28% in the previous session, but was on track to record its biggest weekly fall ever.

Spot gold rose 0.6% to $1,586.21 per ounce by 1022

GMT. For the week, the precious metal is down 5.1% - the most

since November 2016. U.S. gold futures fell 0.2% to

$1,586.40. Gold dipped as much as 4.5% on Thursday as panic-selling forced investors to cover margin calls in other assets. "We had some liquidation in gold ... some might be surprised that gold was down and say it's not a safe haven asset any more, but in this context, it helps generating liquidity at any time you need it," said UBS commodities analyst Giovanni Staunovo. "Some are using the opportunity to buy (gold) at a lower level (now). Also, there's some stabilisation in the market and that's helping as well." In a move to stem a market meltdown, the Federal Reserve on Thursday offered $1.5 trillion in short-term loans, signalling more aggressive action in the coming days to stimulate the economy. European stocks bounced back from their worst day ever, as signs of a U.S. stimulus package helped to soothe fears about an economic shock from the contagion. "We expect prices to remain supported by risk-off sentiment in the coming months as uncertainty surrounding global growth persists with the Covid-19 pandemic now spreading throughout the world," Fitch Solutions said in a note, adding an oil price war will also support.

Palladium , meanwhile, rose 9% to $1,996.96 per ounce,

but was headed for a weekly decline of 22%. "It's a small market, very illiquid and has low trading volumes. If someone wants to sell, we get these ugly moves," UBS's Staunovo said. "We should see it staying in deficit. But, if it's a risk off environment and considering the weak market size of palladium, we will see these large shifts. But again, lower prices might offer (buying) opportunities."

Platinum gained 4.2% to $794.90, but was down 11.4%

for the week - the steepest dip since 2010.

Silver fell 0.7% to $15.71, having earlier dipped up

to 3.3%.

(Reporting by Sumita Layek in Bengaluru; editing by Barbara Lewis)