PRECIOUS-Gold eases from six-year peak but remains on track for weekly gain

* Gold up about 1.7% this week
* Silver set for best week in three years
* SPDR Gold holdings jumped 1.4% on Thursday

(Updates prices)
By Arpan Varghese
July 19 (Reuters) - Gold eased on Friday as investors booked
profits after prices raced past $1,450 an ounce to hit a
six-year peak, but Middle East tensions and prospects for lower
interest rates kept bullion on track for a second week of gains.
Spot gold XAU= shed 0.6% to $1,437.51 by 1151 GMT, having
touched its highest since early May 2013 at $1,452.60.
However, U.S. gold futures GCcv1 hung on to gains,
advancing by about 0.8% to $1,438.80.
"What we have been seeing over the past couple of hours is a
natural bit of profit-taking with gold having made this big move
higher. Investors are holding their breath going into the end of
the week and the seasonally slow summer period," said Mitsubishi
analyst Jonathan Butler.
"But 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."
In a speech interpreted as a strong argument in favour of
quick monetary action, New York Fed President John Williams on
Thursday said that policymakers could not wait for economic
disaster to hit before adding stimulus. The dollar recovered after a sharp fall triggered by the
speech, latching on to a subsequent statement from a New York
fed representative that Williams' comments were academic and not
about immediate policy direction. USD/
Expectations that the U.S. Federal Reserve will cut interest
rates by at least 25 basis points (bps) at its policy meeting
over July 30-31 have fuelled gold's momentum.
"Now that bullion has broken through $1,440, the figure will
be the key for further gains, as targets extend toward $1,500,"
industrial and trading services group MKS PAMP said in a note.
Investors also took stock of developments in the Middle
East, with the United States saying its navy had destroyed an
Iranian drone in the Strait of Hormuz. Iran, meanwhile, said all
its drones had returned to base safely and there was no sign of
major escalation in the Gulf. Gold is considered a safe investment during times of
political or economic uncertainty, with global growth concerns
also playing on investors' minds recently.
Holdings of SPDR Gold Trust GLD , the world's largest
gold-backed exchange-traded fund, rose 1.4% to 814.62 tonnes on
Thursday from 803.18 tonnes the previous day. GOL/ETF
Among other precious metals, platinum XPT= gained 1% to
$857.73 while palladium XPD= gained 0.2% to $1,528.29. Silver
XAG= slipped 0.2% to $16.30 and was on track for its best week
since July 2016, having gained nearly 7%.