By Vijaykumar Vedala
BENGALURU (Reuters) - Gold eased slightly on Friday as the dollar edged up from recent lows, but the metal held near a three-week high and was on track for a second straight weekly rise.
The safe haven asset has been on an upswing since last Friday and has risen nearly 2 percent this week following weaker-than-expected U.S. payrolls data and comments from Federal Reserve Chair Janet Yellen which dampened expectations of an imminent rate hike.
Spot gold was down 0.2 percent at $1,265.46 an ounce by 0652 GMT. Bullion on Thursday touched its highest since May 18 at $1,271.31. U.S. gold fell 0.3 percent to $1,268.50.
Spot silver touched a three-week high earlier in the day and was on track for its biggest weekly gain since April 29. The white metal, which has risen more than 5 pct this week, dipped 0.40 percent to $17.21 an ounce.
"Last week's unexpectedly weak U.S. jobs data and subsequent cautious tone by Yellen opened the door for gold to resume its bull cycle. A Brexit could see gold push towards $1,400 an ounce," ANZ analyst Daniel Hynes said in a note.
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"Investor demand is expected to remain strong in the short term, driven by easing expectations of a rate hike in the United States. However, the backdrop of easing monetary policies, negative bond yields, and a likely pause in dollar appreciation should also be supportive."
The Fed is likely to raise U.S. interest rates in September and possibly as early as July, according to a Reuters poll taken in the days after news of a sharp drop in hiring that has led some to worry that the economy is losing momentum.
Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.
"UK and German sovereign debt yields fell to record lows, helping to fuel gold's rally," HSBC analyst James Steel said in a note.
"Safe haven and hedge-related buying ahead of the UK referendum on continued EU membership is becoming more noticeable, with a portion of this demand being funnelled into physical gold purchases."
The dollar index stood at 94.210, pulling away from a trough near 93.400. Driving the index's rise was a bearish turn in the euro.
Holding in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.71 percent to 887.38 tonnes on Thursday, the highest since October 2013.
Among other precious metals, platinum and palladium were headed towards a second straight week of gains.
(Reporting by Vijaykumar Vedala in Bengaluru; Editing by Richard Pullin and Sunil Nair)