PRECIOUS-Gold near 2-week low as dollar eclipses safe-haven appeal

* SPDR Gold holdings rose 0.4% on Friday
* Speculators raise COMEX gold longs in week to May 14
* $1,265 critical level for gold - analyst

(Adds details, comments and updates prices)
By Arijit Bose
May 20 (Reuters) - Gold steadied on Monday, trading near a
two-week low hit in the previous session, as strong U.S.
economic data underpinned the dollar amid geopolitical as well
as trade tensions.
Spot gold XAU= was broadly unchanged at $1,276.79 per
ounce at 0321 GMT.
U.S. gold futures GCcv1 were 0.1% higher at $1,276.40 an
ounce.
The metal fell to a two-week low of $1,274.51 an ounce on
Friday after data showed United States consumer sentiment jumped
to a 15-year high in early May amid growing confidence over the
economy's outlook. "The safe-haven demand of the U.S. dollar is taking some of
the gloss off gold's safety," said Michael McCarthy, chief
market strategist, CMC Markets.
"It is a tough time all around for gold with the break below
$1,290 also pressuring it. In the absence of safe-haven demand I
would expect to see ongoing modest pressure on gold prices."
Rekindled Sino-U.S. trade tensions have seen the dollar
.DXY mimicking its characteristics from last year when it was
preferred over gold as a safe-haven hedge.
The dollar index booked its biggest weekly rise since early
March last week. USD/
Market participants were left concerned after Google
confirmed a Reuters report stating that it suspended some
business with Chinese tech giant Huawei, which has been a
sticking point in the trade relations between the United States
and China. In the Middle East, Iran was served a new warning by Trump
who tweeted that if the country wanted to fight, that would be
its "official end". The heightened rhetoric follows last week's attacks on Saudi
oil assets and the firing of a rocket on Sunday into Baghdad's
heavily fortified "Green Zone" that exploded near the U.S.
embassy. "For gold, $1,265 is now a critical support that must hold.
A daily close below that region implies a much deeper correction
could be imminent," OANDA analyst Jeffrey Halley said in a note.
Meanwhile, holdings of SPDR Gold Trust GLD , the world's
largest gold-backed exchange-traded fund, rose 0.4% to 736.17
tonnes on Friday. GOL/ETF
Hedge funds and money managers also raised their net long
positions in COMEX gold in the week to May 14, the U.S.
Commodity Futures Trading Commission (CFTC) said on Friday.
CFTC/
"We suspect some of the these new longs must have gotten
shredded over the past two sessions," INTL FCStone analyst
Edward Meir said in a note.
Among other precious metals, silver XAG= was up 0.3% to
$14.43 an ounce, having registered a more than five-month low at
$14.35 in the previous session.
Platinum XPT= gained 1% to $821.85, having fallen to
$812.50, its lowest since March 11, in the previous session.
Palladium XPD= rose 0.3% to $1,314. The metal used in
catalytic converters in car exhaust systems has shed about 19%
since scaling a record peak of $1,620.53 in March.