* Spot gold on track for biggest weekly gain in seven
* Could extend gains to $1,237/oz -technicals
* Palladium off eight-month highs hit on Thursday (Updates prices)
BENGALURU, Oct 12 (Reuters) - Gold fell on Friday,retreating from two-month highs hit in the previous session, asglobal equity markets recovered some poise after dramaticlosses.
Spot gold XAU= was down 0.2 percent at $1,221.29 an ounceby 1117 GMT, having jumped about 2.5 percent on Thursday as anequities sell-off steered investors towards safe-haven assets.Thursday's peak of $1,226.27 was the highest since July 31.
Gold has risen about 1.6 percent this week, on track for itsbiggest weekly gain in seven.
"The markets have kind of stabilised and things have calmeddown a bit and the sort of momentum for gold to push higher isnot with us at the moment," said Macquarie commodity strategistMatthew Turner.
Global shares were having their strongest day in nearly amonth on Friday as European and Asian markets recovered from abrutal sell-off that left them on track for their worst weeksince February. MKTS/GLOB
Despite gold's sharpest one-day percentage gain since June2016 on Thursday, the precious metal is still down about 11percent from its April peak, with investors buying dollars asthe U.S.-China trade war unfolds against a backdrop of risingU.S. interest rates.
"We could see some bounces like this as the futures marketis extremely short, Turner said. "But, ultimately, prices aregoing to drift down ... The fundamentals for gold are stillweak."
Thursday's surge helped bullion to break above the narrowtrading range it has been stuck in for the past 1-1/2 months.
"We need to wait to see how the stock markets are performinglater in the day," said MKS head of trading Afshin Nabavi.
"Breakout for gold on Thursday was around $1,207 to $1,212and if prices break down to that level again, it would be a goodentry point for gold."
Spot gold could extend gains to $1,237 an ounce, assuggested by a Fibonacci ratio analysis, said Reuters technicalanalyst Wang Tao. urn:newsml:reuters.com:*:nL4N1WS1S7
"Gold is trading fairly close to the 100-day moving averageat $1,228. There should be plenty of resistance, but a closeabove that level could signal a move higher," MKS PAMP Grouptraders said in a note.
In other precious metals, palladium XPD= was up 1.1percent at $1,088.80, still shy of the previous session's peakof $1,096.80, its highest since Jan. 26.
Silver XAG= rose 0.6 percent to $14.65 and platinum XPT= was up 0.3 percent at $841.50. (Reporting by Nallur Sethuraman in BengaluruEditing by Susan Fenton and David Goodman) ((Sethuraman.NR@thomsonreuters.com; (Within U.S.1-651-848-5832, Outside U.S. +91 8067496031); Reuters Messaging:email@example.com))