* Gold down 2.3 pct for the week
* Palladium posts largest two-day gain since 2008
* U.S. consumer spending up in July
(Adds byline, NEW YORK dateline; updates prices, adds comment)
By Luc Cohen and Clara Denina
NEW YORK/LONDON, Aug 28 (Reuters) - Gold rose on Friday as
technical indicators and suggestions the U.S. central bank may
delay a rate rise provided support, but the metal was still on
track to post its biggest weekly drop in five weeks amid dollar
strength and strong U.S. economic data.
Spot gold XAU= was up 0.8 percent at $1,134.26 an ounce by
2:55 p.m. EDT (1855 GMT), but still down more than 2 percent for
the week.
U.S. gold for December delivery GCcv1 rose 1 percent to
settle at $1,134 an ounce.
The gains came as U.S. Federal Reserve officials suggested
the central bank may delay tightening monetary policy beyond
next month due to turmoil in financial markets. ID:nL1N1130HX
A rate rise would dim the appeal of non-interest bearing
assets like gold.
"With that in mind, there's a little bit of breathing room,"
said Eli Tesfaye, senior market strategist for brokerage RJO
Futures in Chicago, noting that this "breathing room" allowed
technical factors to take over. "This is a classic retracement
from low to high."
Gold prices crossed a key technical retracement level
between July's 5-1/2-year lows and last week's 6-1/2-week highs,
providing a chart-based boost, Tesfaye said.
Nonetheless, bullion still plunged 2.3 percent on the week,
as a slew of U.S. economic data suggested stronger growth.
U.S. consumer spending picked up in July, data showed on
Friday. This followed Thursday's upward revision in U.S.
economic growth in the second quarter to 3.7 percent from the
initial estimate of 2.3 percent. ID:nLNNSJEBF4 ID:nL1N1120QD
"The big question for next week is whether the anxiety that
crept into the market on Aug. 10 when China devalued its
currency is going to continue," Saxo Bank senior manager Ole
Hansen said.
Weak gold prices have failed to spur physical demand in
Asia, with premiums in India slipping and investors in China
still hooked on volatile equities. GOL/AS
Palladium XPD= rose sharply for the second straight
session on physical buying and technical dealings after hitting
five-year lows on Wednesday, Tesfaye said. It was up 4.6 percent
to $585 an ounce on Friday, for its largest two-day gain since
2008.
Spot silver XAG= was up 0.6 percent at $14.56 an ounce,
having fallen to a six-year trough of $13.93 on Wednesday.
Silver has dropped nearly 5 percent this week, its steepest such
decline since February. Platinum XPT= was up 1.5 percent at
$1016.50 an ounce.