By A. Ananthalakshmi
SINGAPORE (Reuters) - Gold edged higher on Friday and was poised for a second straight week of gains as persistent fears over the health of the world economy took a toll on global equities and the dollar, bringing in safe-haven bids for the metal.
Platinum and palladium were the biggest precious metal gainers of the day, recovering about 2 percent from sharp overnight losses.
Both metals have been pressured lower on concerns about global growth and weak equity markets, said HSBC analyst James Steel, noting that investors have built sizable long positions in platinum and palladium. But the lower prices could also spark physical buyers looking for bargains, he said.
"Although we saw no evidence of industrial or end user buying on Thursday's price drop, we anticipate that physical buying will materialize should the market decline further."
Platinum rose 1.2 percent to $1,251.70 an ounce by 0618 GMT. On Thursday, platinum fell below the price of gold for the first time since April 2013, before paring some losses to close down 1.3 percent.
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Palladium was up over 1 percent at $743.72, after falling as much as 5 percent in the previous session.
Spot gold rose 0.1 percent to $1,240 an ounce. The metal is up about 1.4 percent for the week after reaching a one-month high of $1,249.30 on Wednesday.
Gold has been getting a boost along with other safe-haven assets such as bonds and the Japanese yen on increasing concerns over the global economy.
"We note near-term resistance at $1,245 and look to a break of either $1,220 or $1,250 in order to determine the near-term outlook," ScotiaMocatta said in a note.
Weak data from China and Europe have in particular spooked markets, though U.S. jobless claims and industrial output data on Thursday was encouraging.
Dollar weakness has also supported the precious metals group as the sluggish data stoked worries that the U.S. Federal Reserve could postpone any increase in higher rates.
A weak greenback makes dollar-denominated assets less expensive for holders of other currencies.
Asian stocks clawed back some of this week's losses on Friday after the solid U.S. data calmed turbulence in global financial markets, though underlying worries about slowing world economic growth kept investors on edge. [MKTS/GLOB]
In a sign of higher investor interest, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.24 percent to 760.94 tonnes on Thursday.
In top buyer China, premiums recovered slightly to $2-$3 an ounce from $1-$2 overnight, indicating higher demand and lending support to global prices.
(Reporting by A. Ananthalakshmi; Editing by Joseph Radford, Tom Hogue and Biju Dwarakanath)