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PRECIOUS-Gold hits three-week high, set for second weekly rise

* Global shares down, dollar off lows
    * Brexit concerns lift gold demand
    * Coming up: U.S. Federal Reserve meeting June 14-15

 (Updates prices; adds comment, second byline, NEW YORK
dateline)
    By Marcy Nicholson and Clara Denina 
    NEW YORK/LONDON, June 10 (Reuters) - Gold rebounded to a
fresh three-week high on Friday, as investor risk aversion
lifted appetite for the metal, putting it on track for a second
straight weekly rise. 
    Often perceived as an insurance against economic and
financial concerns, gold has risen more than 2 percent this week
after weaker than expected U.S. payrolls data dented
expectations of an imminent rise in U.S. interest rates.
 
    Prices are likely to be bolstered in the next two weeks by
nervousness over Britain's June 23 referendum on its EU
membership, analysts said. 
    "The market is no longer worried that the Fed will raise
rates next week and investors are more concerned about the UK
referendum, which is likely to help increase demand for gold,"
Danske Bank senior analyst Jens Pedersen said. 
    Spot gold rose as high as $1,277.70 an ounce, its
highest since May 18, and was up 0.4 percent at $1,273.21 an
ounce by 2:08 p.m. EDT (1808 GMT). It was negative earlier.
    U.S. futures for August delivery settled up 0.3
percent at $1,275.90 an ounce.
    Spot silver touched a 3-1/2-week high at $17.37 an
ounce earlier in the session and was up 0.1 percent at $17.30 an
ounce. It was on track for its biggest weekly gain since April,
up 5.5 percent. 
    "If the Fed restrains from raising rates in June and July
and doesn't give a precise guidance, then that should support
gold, also because the dollar would weaken," Commerzbank analyst
Daniel Briesemann said.
    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.
    Gold rebounded despite a stronger dollar, as global shares
dropped, and 10-year yields in Germany, Japan and Britain all
struck record lows. 
    "While we still expect the Fed to raise rates twice this
year, the market is increasingly discounting this possibility,"
said ANZ Research in a note, adding that it expects gold to
resume its bull cycle.
    "The backdrop of easing monetary policies, negative bond
yields, and a likely pause in U.S. dollar appreciation should
also be supportive. This should negate some lackluster physical
demand in Asia."    
    Holdings in SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, rose 0.7 percent to 887.38
tonnes on Thursday, the highest level since October 2013. 
    Among other precious metals, platinum fell 0.7
percent to $991.40 and palladium was down 2.8 percent at
$542.50.

    
 (Additional reporting by Vijaykumar Vedala in Bengaluru;
Editing by Keith Weir and Cynthia Osterman)
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