* Technicals suggest gold testing support at $1,308 and break below
* Platinum above 8-week low hit on Tuesday
* Palladium off over 5-week lows hit in previous session (Updates prices)
By Sethuraman N R
Aug 31 (Reuters) - Gold stood above two-month lows touched in the prior session as investors waited for U.S. nonfarm payroll numbers later this week for clues on the timing of a Federal Reserve rate hike, but the bullion was on track for its first monthly decline since May.
Spot gold XAU= was up 0.1 percent at $1,312.55 per ounce at 0654 GMT on Wednesday. The metal fell 1 percent to $1,308.65 on Tuesday, its lowest since June 28.
Gold was heading for a drop of 2.8 percent in August.
U.S. gold futures GCcv1 were mostly unchanged at $1,315.50
"There is some buying today ... people are taking the view that gold is going to fluctuate within a tight range prior to a strong signal from the Fed," said Richard Xu, a fund manager at HuaAn Gold, China's top gold exchange-traded fund (ETF).
U.S. consumer confidence rose to an 11-month high in August, with households more upbeat about the labour market, in a further sign that the economy was regaining steam after faltering in the first half of the year. Chair Janet Yellen said on Friday the case for higher rates was strengthening, although she gave little clarity on the timing of a move. In an interview on Tuesday, Vice Chair Stanley Fischer said the U.S. job market is nearly at full strength and that the pace of rate increases by the Fed will depend on how well the economy is doing. pace of rate hikes is heavily dependent on U.S. economic data. Friday's nonfarm report for August, as well as other data, could reinforce hawkish messages from Fed officials.
Gold is highly sensitive to rising U.S. interest rates which increase the opportunity cost of holding non-yielding bullion while boosting the dollar in which it is priced.
Gold has a strong downside obstacle at $1,304 and an inability to break it may see a relief rally, said Hareesh V, research head at Kochi, India-based Geofin Comtrade Ltd.
"Slipping past $1,304 will likely trigger a major selloff and probably take prices lower towards $1,280 initially followed by $1,220, where the 200-day moving average support is placed."
Spot gold may retest a support at $1,308 per ounce, with a good chance of breaking below this level, and falling more to the next support at $1,303, according to Reuters technical analyst Wang Tao. XAG= edged higher 0.7 percent to $18.69 an ounce.
Platinum XPT= was flat at $1,053.24. It touched an eight-week low of $1,048 Tuesday. Palladium XPD= rose 0.6 percent after touching a five-week low of $670.72 in the previous session.