* Fed unlikely to raise rates sooner than signalled- analyst
* Silver on track for best week in seven
Oct 15 (Reuters) - Gold was set on Friday for its best week in nearly five months, with a weaker U.S. dollar lifting its appeal despite a looming Federal Reserve stimulus taper.
Spot gold eased 0.2% to $1,792.54 per ounce by 0609 GMT, but was up 2% for the week so far. U.S. gold futures inched down 0.3% to $1,793.10 per ounce.
Boosting gold's appeal for buyers in other currencies, the dollar index was headed for its first weekly decline in six.
Michael Langford, director at corporate advisory AirGuide, said while gold should settle around $1,800, it was unlikely to break higher in the following week.
"The Fed is unlikely to raise rates any sooner than previously signalled and the sheer amount of money floating around in the system should help all physical assets including gold continue to rise over the next few months."
While most Fed policymakers agree the central bank could start reducing its monthly bond purchases as soon as next month, they're are sharply divided over inflation and what they should do about it.
Data on Thursday showed U.S. producer prices posted their smallest gain in nine months in September. The report came on the heels of a solid increase in consumer prices.
While gold is often considered an inflation hedge, reduced stimulus and interest rate hikes push government bond yields up, raising the opportunity cost of holding non-yielding bullion.
Gold is undervalued by around $150, driven by expectations the spike in inflation will be transitory, analysts at ANZ Research said in a note. However, they said pricing pressure remains intense.
Spot silver fell 0.4% to $23.45 but was headed for its biggest weekly gain in seven.
Platinum rose 0.1% to $1,056.02 and palladium gained 0.4% to $2,137.68. Both metals were headed for a second week of gains. (Reporting by Eileen Soreng and Nakul Iyer in Bengaluru; Editing by Subhranshu Sahu)
