Gold heads for weekly gain on weak US economic data, softer dollar

Gold prices rose on Friday and headed for weekly gains, as weaker U.S. economic data bolstered demand and a softer dollar lent further support, while investors awaited U.S. payroll data for clues on the Federal Reserve's monetary policy trajectory.

FUNDAMENTALS

* Spot gold was up 0.3% at $3,361.36 an ounce, as of 0036 GMT. Bullion is up 2.3% for the week so far. * U.S. gold futures also climbed 0.3% to $3,384.40.

* The U.S. dollar index headed for a weekly loss, making gold more affordable for holders of other currencies. * The number of Americans filing new applications for unemployment benefits increased to a seven-month high last week.

* Investors are now awaiting U.S. nonfarm payroll data due at 12:30 GMT, after a slew of data throughout this week highlighting labor market softness.

* Economists polled by Reuters forecast nonfarm payrolls increased by 130,000 jobs in May, down from 177,000 in April, while the unemployment rate is expected to remain steady at 4.2%.

* Meanwhile, Fed policymakers indicated on Thursday that inflation remains a greater concern than labor market cooling, suggesting a prolonged hold on monetary policy adjustments.

* U.S. President Donald Trump and Chinese leader Xi Jinping engaged in a rare leader-to-leader call on Thursday, addressing escalating trade tensions and disputes over critical minerals, though key issues remain unresolved.

* Wall Street closed sharply lower amid a dispute between Trump and billionaire Elon Musk.

* Gold, often seen as a safe-haven asset, tends to perform well during economic uncertainty and in low-interest-rate environments.

* Elsewhere, spot silver fell 1.2% to $35.71 per ounce, still hovering near 12-year high, platinum rose 0.3% to $1,034.34, while palladium was steady at $1,005.88. All three metals were headed for weekly gains. DATA/EVENTS (GMT) 0600 UK Halifax House Prices MM, YY May 0645 France Reserve Assets Total May 0700 EU GDP Revised QQ, YY Q1 1230 US Non-Farm Payrolls, Unemployment Rate, Average Earnings YY May.