PRECIOUS-Gold firms above $1,280 as weak U.S. data rekindles rate-cut hopes

* Spot gold on track for weekly gain of 0.5%
* Spot gold may rise to $1,290/oz - technicals
* Platinum heading for 5th straight weekly loss
* Palladium on track for first weekly gain in four

(Adds comment, updates prices)
By Sethuraman N R
May 24 (Reuters) - Gold prices held steady on Friday after
rising above $1,280 in the previous session as weak U.S. data
pushed the dollar off 2-year highs and reignited hopes of a rate
cut by the Federal Reserve this year.
Spot gold XAU= was steady at $1,283.21 per ounce by 0653
GMT, after rising as much as 1.1% to a one-week peak of 1,287.23
in the previous session. The metal has risen 0.5% so far this
week.
U.S. gold futures for June GCcv1 were down 0.2% at
1,283.10.
"Gold has found a very good support around $1,270. There was
some short covering after the (weak U.S.) data that pushed
prices up. However, the upside could be limited as $1,290 is
acting as a strong resistance," said Peter Fung, head of dealing
at Wing Fung Precious Metals.
The U.S. dollar retreated after hitting its highest level in
two years as weak domestic data and the potential economic
fallout from the trade war with China increased expectations for
an interest-rate cut this year. FRX/
Sales of new U.S. single-family homes fell from near an
11-1/2-year high in April as prices rebounded and manufacturing
activity hit its lowest level in almost a decade in May,
suggesting a sharp slowdown in economic growth was underway.
While the expectations of a rate cut is good for gold,
prices can go higher only if the metal can break above
$1,290-$1,300 range with the dollar still being strong, Fung
added.
Lower interest rates tend to lift gold as it reduces the
opportunity cost of holding the non-yielding bullion.
Four Fed officials on Thursday conceded that aggravating
U.S.-China tensions could threaten economic growth, a marked
deviation from Chair Jerome Powell's Monday comments where he
said it was too early to ascertain the impact of trade on the
trajectory of monetary policy. However, gold has been under pressure of late as investors
preferred the U.S. dollar amid intensifying U.S.-China trade
tensions. The bullion is down nearly 5 percent since touching a
10-month peak in February at $1,346.73.
"Gold has disappointed to the upside often in the past and
we would therefore like to see a string of more consistent gains
before we feel comfortable signalling an all-clear on the
upside," INTL FCStone analyst Edward Meir said in a note.
Spot gold may break a resistance at $1,286 per ounce and
edge up to the next resistance at $1,290, according to Reuters
technical analyst Wang Tao. other precious metals, silver XAG= fell 0.1% to
$14.54 per ounce, while palladium XPD= edged 1% higher to
$1,324.35. Palladium was on track for a 1.1% weekly gain, its
first in four weeks.
Platinum XPT= rose 1.5% to $805.00 an ounce, having
touched its lowest since Feb. 15 at $791 in the previous
session.Platinum was heading for its fifth straight weekly loss.

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