By Brijesh Patel
May 24 (Reuters) - Gold eased on Friday as stock markets regained momentum, with a weaker dollar and renewed hopes of a rate cut by the U.S. Federal Reserve keeping bullion on track for a weekly gain.
Spot gold XAU= was down 0.1% at $1,281.62 per ounce by 1101 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 about 0.4% so far this week.
U.S. gold futures for June GCcv1 were down 0.3% at $1,281.
"Stocks are pointing higher, we have renewed risk appetite coming into oil markets," said Saxo Bank commodity strategist Ole Hansen.
"Gold is doing more or less what it is supposed to be, finding a bid when the other markets fell, but the bid hasn't really been strong enough this week to push it to levels which could have attracted renewed buying interest. It's not out of the woods yet."
World stocks edged higher and oil prices recovered from bruising falls, after U.S. President Donald Trump nurtured hopes of progress in U.S.-China talks. MKTS/GLOB
Helping bullion's appeal, the dollar index .DXY edged away from two-year highs after weak U.S. manufacturing activity data sparked worries that the trade conflict with China may hurt the world's largest economy and affect the currency's safe-haven status. USD/
"I think the weak data increases the risk-on getting behind the curve and cutting rates. That's potentially where we would see the next move higher in gold when the markets get more aggressive on rate cuts in the U.S.," Saxo Bank's Hansen said.
Four Fed officials on Thursday said recent ratcheting up of U.S.-China trade tensions is creating uncertainties for businesses and could threaten economic growth.
Meanwhile, British Prime Minister Theresa May said on Friday she would quit, triggering a contest that will bring a new leader to power who is likely to push for a more decisive Brexit divorce deal.
"For gold, (May's exit) means nothing, it meant nothing in the past, don't think it will change now. It will be more important to see who will succeed May," said Commerzbank analyst Carsten Fritsch.
On the technical side, spot gold may break a resistance at $1,286 and edge up to the next resistance at $1,290, according to Reuters technical analyst Wang Tao.
Among other precious metals, silver XAG= fell 0.4% to $14.53 per ounce, while palladium XPD= climbed 1.9% to $1,335.75. Palladium was on track for a 1.8% weekly gain, its first in four weeks.
Platinum XPT= rose 1.6% to $806.25 an ounce, having touched its lowest since Feb. 15 at $791 in the previous session, putting it on track for its fifth straight weekly loss.
(Reporting by Brijesh Patel in Bengaluru, editing by Louise Heavens)
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