* Dollar drifts away from two-month peaks
* Gold up after falling for six sessions since May 17
(Updates prices, adds comment)
By Clara Denina
LONDON, May 26 (Reuters) - Gold rose on Thursday, moving
away from a seven-week low hit in the previous session, as the
dollar extended losses after the release of U.S. economic data.
Orders for long-lasting U.S. manufactured goods surged in
April on strong demand for transportation equipment and a range
of other products, but continued weakness in business spending
plans suggested the manufacturing rout is far from over.
Spot gold XAU= rose 0.1 percent to $1,224.96 an ounce by
1414 GMT. The metal had fallen to its lowest since April 6 at
$1,217.25 on Wednesday. U.S. gold GCcv1 was up 0.2 percent at
$1,225.60.
"Gold has entered a phase of consolidation due to stronger
views that the U.S. Fed will raise rates this summer," said
Carlo Alberto de Casa, chief analyst at ActivTrades.
"Today we are just seeing a technical rebound after the
metal touched $1,217 yesterday, where the next chart support
stands."
The prospect of an interest rate rise, as indicated by U.S.
Fed meeting minutes released last week, and a strengthening
dollar have pushed gold down 5 percent so far in May, putting it
on track for its biggest monthly decline since November.
Higher interest rates increase the opportunity cost of
holding non-interest yielding gold.
Other data on Thursday showed new applications for
unemployment benefits fell more than expected last week,
indicating the economy is gaining momentum after growth braked
sharply in the first quarter.
St. Louis Federal Reserve President James Bullard said on
Thursday that U.S. labour markets are relatively tight and may
put upward pressure on inflation.
Federal Reserve Board Governor Jerome Powell, a permanent
voter on the Fed's rate-setting committee, is scheduled to speak
later on Thursday.
The market will also monitor Fed Chair Janet Yellen's
comments at a panel event hosted by Harvard University on
Friday.
Top consumer China's gold imports via main conduit Hong Kong
dipped in April from a three-month high in the previous month,
data showed on Thursday.
Gold has risen more than 15 percent since the start of the
year, as investors bought on concerns about global economic
growth and the volatility of stock markets. But physical demand
from main markets China and India, which together account for
more than half of global consumption, has been weak.
"The absence of physical demand is a bit alarming in a
market where price is so much driven by investment, which can
flip very easily," Natixis analyst Bernard Dahdah said.
"A drop in gold in response to higher U.S. rates will be
quite sharp one."
Among other precious metals, spot silver XAG= rose 1.1
percent to $16.40 an ounce, platinum XPT= gained 1.2 percent
to $1,000.25 and palladium XPD= jumped by 3 percent to
$542.22.