* Gold setting up for 4th straight week of gains
* Powell says Fed will "act as appropriate"
* Trump orders U.S. companies to look at closing China operations
* Palladium on track for third weekly gain
* Dollar, stock markets slide (Updates prices)
By Sumita Layek and Arpan Varghese
Aug 23 (Reuters) - Gold surged 2% on Friday as investors interpreted U.S. Federal Reserve Chair Jerome Powell's speech as leaning toward a dovish monetary policy stance and President Donald Trump's latest comments exacerbated trade tensions with China.
Spot gold XAU= rose 1.9% at $1,526.60 an ounce by 14:08 pm EDT (1801 GMT), shaking off slight headwinds ahead of the Fed Chair's speech.
Prices earlier rose to $1,528.79, the highest since Aug. 13, when spot gold had scaled a six-year peak of $1,534.31.
U.S. gold futures GCcv1 settled up 1.9% to $1,537.60.
"The fact that he (Powell) said that they (the Fed) will act appropriately to sustain expansion is pretty bullish for gold. The two primary tools they have are quantitative easing (QE) or lower rates - both those tools will cause gold to go higher," said Bob Haberkorn, senior market strategist at RJO Futures.
"The move this morning is just more people buying gold simply with the expectations that interest rates will be lower by year-end."
Powell said the U.S. economy is in a "favorable place," but gave few clues about interest rate cuts at its next meeting. However, he listed a series of economic and geopolitical risks the Fed is monitoring, noting these were linked to the trade spat. shouldn't be surprised if we see the Fed deliver a full percentage point in rate cuts over the next 12 months and a new QE program as we may only need a couple of the following macro events to blow up: trade uncertainties, weakness in China and Germany, Brexit, Hong Kong, and the dissolution of the Italian government," Edward Moya, a senior market analyst at OANDA, said in a note.
Powell's speech prompted a backlash from Trump on Twitter, asking whether the Fed chair was a greater "enemy" than China's leader Xi Jinping.
Trump also ratcheted up the rhetoric on China, ordering U.S. companies to look at ways to close operations in the country, which sent equities tumbling and drove further inflows into safe-haven gold. .N US/
This came after China unveiled retaliatory tariffs against about $75 billion worth of U.S. goods. means there is no resolution, the escalation continues. Investors are selling the risk and buying gold," said SP Angel analyst Sergey Raevskiy.
Gold has risen nearly 8% so far this month and about 19% this year, and was set for a fourth straight week of gains.
Elsewhere, silver XAG= gained 2.3% to $17.39 an ounce, while platinum XPT= was up 0.1% at $858.11.
Palladium XPD= fell 1.7% to $1,461.83 an ounce, but the auto catalyst metal remained on track for a third straight weekly gain of about 0.9%.
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