* 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 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 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.
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.
Among other precious metals, silver fell 0.1% to $14.54 per ounce, while palladium edged 1% higher to $1,324.35. Palladium was on track for a 1.1% weekly gain, its first in four weeks.
Platinum 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.
Reporting by Nallur Sethuraman and Arijit Bose in Bengaluru; Editing by Shreejay Sinha and Gopakumar Warrier