Gold on track for biggest weekly gain in five

Gold prices edged up on Friday and were on track for their biggest weekly gain since mid-April as the dollar eased amid lingering political turbulence in the United States.

In the previous session, the metal snapped a five-day rally and slipped 1.1 percent on profit-taking, its biggest one-day percentage drop since May 3.

"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 was up 0.4 percent at USD 1,250.96 per ounce, as of 0819 GMT. It climbed 1.9 percent for the week and is set for its biggest weekly rise in five.

US gold futures slipped 0.1 percent to USD 1,251.10 an ounce.

The dollar index, which measures the greenback against a basket of six major currencies, was down 0.3 percent on Friday after gaining some reprieve overnight, helped by solid US economic data.

New applications for US 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.

"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 US 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 US 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 USD 1,255 per ounce, as it has stabilised around support at USD 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.

Among other precious metals, palladium gained 0.5 percent to USD 765.90 per ounce. The metal slipped 5 percent this week, poised for its biggest weekly fall since late January.

Platinum slid 0.4 percent to USD 930.25 an ounce, while silver climbed 0.9 percent to USD 16.69 an ounce.

The metals have gained about 1.7 percent and 1.4 percent for the week respectively, and are on track to register their best weekly growth since the week ended April 14.