Gold heads for third straight weekly gain

By Eileen Soreng

BENGALURU (Reuters) - Gold prices held steady on Friday as renewed political and economic concerns including China's weak growth weighed on Asian stocks, with the metal on track for a third straight weekly gain.

Spot gold was up 0.1 percent at $1,226.44 per ounce as of 0749 GMT. The metal is up 0.7 percent for the week.

U.S. gold futures were up 0.1 percent at $1,230.9 an ounce.

"The enormity of significant tail risks around the U.S. midterm elections and escalating pockets of geopolitical angst still make gold a favourable hedge against these," said Stephen Innes, APAC trading head at OANDA in Singapore.

"I think it has been constructive for gold prices holding up despite a stronger U.S. dollar," Innes said.

Asian stocks clawed back losses on Friday as China's efforts to bolster investor confidence helped its share markets rally, although data showing the world's second-largest economy growing at the slowest pace since 2009 capped broader gains.

"The geo-political and market-wide factors that were driving safe haven demand for gold such as Fed interest rate hike concerns, the Italian budgetary drama, the global oil price(rally) and the U.S.-China trade war, are still with us," said Ronan Manly, a precious metals analyst at Singapore-based dealer BullionStar.

Meanwhile, the European Commission said on Thursday a draft 2019 budget from Italy was in "particularly serious non-compliance" with EU rules, setting the stage for a possible unprecedented rejection of the country's fiscal plan.

The recent sell-off in global stock markets has boosted the appeal for gold, which is seen as a safe store of value during political and economic uncertainty, driving prices to a 2-1/2-month peak of $1,233.26 on Monday.

However, the yellow metal has declined about 10 percent from its April peak after investors preferred the dollar as the U.S.-China trade war unfolded against a background of higher U.S. interest rates.

"Gold is in a stronger position now than before. We are forecasting gold to end the year around $1,240 per ounce," said John Sharma, an economist with National Australia Bank.

Spot gold may retest a support at $1,217 per ounce, a break below which could cause a loss to the next support at $1,208, according to Reuters technical analyst Wang Tao.

In other precious metals, platinum rose 0.7 percent to $831.10 per ounce, but was down 0.8 percent for the week.

Palladium gained 1.22 percent to $1,083.60 per ounce and was up over 1 percent for the week. Silver was up 0.4 percent at $14.61.

(Reporting by Eileen Soreng and Vijaykumar Vedala in Bengaluru; Editing by Subhranshu Sahu and Vyas Mohan)