* Gold has risen by 0.7 pct so far this week
* SPDR Gold holdings up 2.5 pct in past two weeks (New throughout, updates prices, market activity and comments)By Sethuraman N RBENGALURU, Oct 19 (Reuters) - Gold prices edged up onFriday, on course for a third week of gains as weaker stockmarkets spurred investors to seek refuge in bullion, which alsogained technical momentum after scaling major milestones.Spot gold was up 0.2 percent to $1,227.40 an ounce by0303 GMT. The metal has gained 0.7 percent this week and hit a2-1/2-month high on Monday at $1,233.26. U.S. gold futures were steady at $1,230.40."Gold has done really well to hold up here, given the Fedwas really hawkish. Sensitivity to equity markets is helpinggold at the moment," said Macquarie commodity strategist MatthewTurner."We are entering a new paradigm, where any further rate hikecould be a sign that the economy is overheating a bit, whichshould be more positive for gold and problematic for equities."Every U.S. Federal Reserve policymaker backed raisinginterest rates last month, according to minutes of its Septembermeeting, which were released on Wednesday. Rising interest rates are normally negative for gold becausethey increase the opportunity cost of holding non-yieldingbullion and could boost the dollar, in which gold is priced.
In wider markets, European stocks tumbled again as Italy'sgovernment braces for a showdown with the European Union overRome's budget plans. Elevated geopolitical risks and pressure on equity marketshave created a supportive setting for gold buying, said DeutscheBank metals strategist Nicholas Snowdon.
The recent sell-off in global stock markets has boosted theappeal of gold, which is often viewed as a safe store of valueduring political and economic uncertainty.
"Today's attempt by gold to lastingly exceed the 100-daymoving average looks promising. If it succeeds, technicalfollow-up buying should push the gold price further up,"Commerzbank analysts wrote."At the same time, gold is resisting the firm U.S. dollar.It is finding support from increased risk aversion among marketparticipants, as reflected in falling stock markets, and fromadditional ETF (exchange-traded fund) inflows."
Holdings of the SPDR Gold Trust , the largestgold-backed ETF, have gained 2.5 percent in the past two weeks.
In other precious metals, platinum rose 1 percent to$834.10 an ounce, silver gained 0.7 percent to $14.65 andpalladium was up 1.3 percent at $1,083.99.<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Gold vs stocks ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Nallur Sethuraman and Sumita Layek in Bengaluru;Editing by David Goodman and David Gregorio)
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