Gold rises, set for biggest weekly gain since mid-April

By Vijaykumar Vedala

(Reuters) - Gold prices edged up on Friday and were on track for their biggest weekly gain since mid-April as the dollar eased and Asian stocks weakened amid ongoing political turbulence in the United States.

The metal slipped 1.1 percent on Thursday on profit-taking, its biggest one-day percentage drop since May 3 and snapping a five-day rally.

"The gold rally was overdone and there was a correction on Thursday. But perhaps, it came down a little too much from the highs of yesterday. So people started to pick up again," said Brian Lan, managing director at gold dealer GoldSilver Central in Singapore.

"People are still wary of geo-political risks and not selling the safe-haven asset yet."

Spot gold had risen 0.3 percent to $1,249.76 per ounce by 0329 GMT. It was up about 1.8 percent for the week, set for its biggest weekly rise in five.

U.S. gold futures were down 0.3 percent at $1,249.60 an ounce.

The dollar traded above six-month lows against an index of six major currencies on Friday but was down 0.1 percent after gaining some reprieve overnight, helped by solid U.S. economic data. [USD/]

New applications for U.S. jobless benefits unexpectedly fell last week and the number of Americans on unemployment rolls tumbled to a 28-1/2-year low, pointing to rapidly shrinking labor market slack.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.1 percent.

"Safe-haven buying has provided strong support to gold prices over the past six months," ANZ said in a note.

"However, rising geopolitical risks in the U.S. and elsewhere are likely to propel prices even higher, despite the spectre of a rate hike in the U.S. next month."

Investors will watch with renewed focus next week's testimony to the Senate by former FBI Director James Comey.

Comey's firing by U.S. President Donald Trump last week set off a political firestorm and culminated on Wednesday in the Justice Department's appointment of a special counsel to probe possible ties between Russia and Trump's 2016 presidential campaign.

Spot gold is expected to test resistance at $1,255 per ounce, as it has stabilised around support at $1,245, according to Reuters technical analyst Wang Tao.

Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.14 percent to 850.71 tonnes on Thursday. [GOL/ETF]

Among other precious metals, palladium was down 0.2 pct at $760.53 per ounce. It has slipped 5.6 percent this week and is on track for its biggest weekly fall since late January.

Platinum is down 0.2 pct at $930.50 an ounce. It was up 1.2 percent for the week and is on course to register its best weekly performance since the week ended April 14.

Silver was up 0.4 pct at $16.60 an ounce, gaining 0.9 percent for the week so far.

(Reporting by Vijaykumar Vedala in Bengaluru; Editing by Amrutha Gayathri and Joseph Radford)