PRECIOUS-Gold rebounds to two-week peak as U.S. data boosts Fed rate cut hopes

* SPDR Gold holdings rise 0.5% on Wednesday
* Palladium hits a peak since May 1 at $1,380.75/oz
* Core PCE price index revised sharply lower

(Updates prices)
By Eileen Soreng
May 30 (Reuters) - Gold shook off headwinds from a stronger
dollar to scale a near two-week peak on Thursday as data pointed
to easing inflationary pressure in the United States, boosting
expectations of a further interest rate cut by the Federal
Reserve.
Spot gold XAU= gained 0.7% to $1,288.03 per ounce by 2:13
p.m. ET (1813 GMT), having hit a high of $1,288.87 earlier, its
highest level since May 17.
The metal reversed course from earlier in the session, when
it fell to its lowest level since May 23 at $1,274.44.
U.S. gold futures GCcv1 settled 0.5% higher at $1,287.1 an
ounce.
While data showed strong growth in gross domestic product in
the first quarter, a gauge of inflation tracked by the Fed
increased at a 1.0% rate last quarter, instead of the previously
reported 1.3% pace. Manufacturing, retail sales, housing and
exports also dropped in April. Fed policymakers are likely to shrug off the last quarter's
growth spurt and focus on the weak domestic demand and inflation
when they meet next month.
"The core PCE (personal consumption expenditures) came in
weaker than expected and is helping gold on the margin since it
reaffirms this market's belief that the next move from the Fed
is a cut, which tends to lower the opportunity cost for holding
non-cash flow yielding assets like gold," said Daniel Ghali,
commodity strategist at TD Securities.
Gold also shrugged off initial pressure from a stronger
dollar .DXY , with the U.S. unit hovering within striking
distance of a two-year high against a basket of major
currencies. USD/
"Gold has held up a lot better than expected with the recent
strength in the dollar and that's a major feather in the cap of
the gold market in the near term," said John Caruso, senior
market strategist at RJO Futures.
The dollar has been used as the preferred hedge against
trade tensions, repeating a trend seen last year.
"Short-term resistances (for gold) to watch include $1,280,
$1,285 and $1,293, levels which were previously support. We
would only turn bullish again on gold should it rise back above
that $1,300 hurdle and stay above it, or print a bullish
reversal at lower levels first," Fawad Razaqzada, market analyst
with Forex.com, wrote in a note.
Meanwhile, holdings of SPDR Gold Trust GLD , the world's
largest gold-backed exchange-traded fund, rose 0.5% to 740.86
tonnes on Wednesday. GOL/ETF
Elsewhere, silver XAG= rose 0.7% to $14.52 per ounce.
Platinum XPT= was up 0.6% at $796.25 per ounce, after
falling to its lowest level since Feb. 15 at $784.42.
Palladium XPD= climbed 1.3% to $1,366.51 per ounce, having
touched a peak since May 1 at $1,380.75.