PRECIOUS-Gold firms as dollar eases, set for third week of gains

* Gold has risen by 0.7 pct so far this week

* SPDR Gold holdings up 2.5 pct in past two weeks

* Palladium posts first weekly gain in three weeks (New throughout, updates prices, market activity and comments)

BENGALURU, Oct 19 (Reuters) - Gold prices edged up on Friday and were on course for a third straight week of gains, supported by robust technical momentum and a softer dollar.

Spot gold was up 0.1 percent to $1,225.75 an ounce by 3:14 p.m. EDT (1914 GMT). U.S. gold futures settled down $1.4, or 0.11 percent, at $1,228.7.

The yellow metal was headed for a 0.7 percent rise this week.

“The technical posture of gold in near term basis has improved remarkably in the past two weeks,” said Kitco Metals senior analyst Jim Wyckoff, adding that the volatility seen in the stocks markets worldwide recently has also been favoring the bullion.

A recent sell-off in global stocks had prompted investors to seek refuge in gold, pushing prices of the bullion to a 2-1/2-month high, at $1,233.26 earlier this week.

However, equity markets recovered on Friday, capping gains in the bullion.

Also supporting gold was a slightly weaker dollar, said David Meger, director of metals trading at High Ridge Futures.

“We have seen a bit of a pick up in safe haven buying over the last couple of weeks based on the concerns we see in economy and equity markets weakening,” Meger said.

Gold, which is priced in dollars, is seen as a safe store of value during political and economic uncertainty.

The dollar index against a basket of currencies was down 0.2 percent, retreating from a one-week peak scaled earlier in the session.

On the technical front, a rise above the 100-day moving average, around $1,225, was also supporting gold, with some analysts saying a clear break above that level could trigger further gains and put further pressure on short-sellers.

Further resistance for gold stood at about $1,236.90 an ounce and then at $1,240.00, Wyckoff said in a note.

Indicative of an improvement in investor sentiment, holdings of the SPDR Gold Trust, the largest gold-backed ETF, have gained 2.5 percent in the past two weeks.

In other precious metals, silver gained 0.3 percent to $14.60.

Platinum rose 0.7 percent to $831.60 an ounce, but was on track to post a weekly decline of 0.6 percent.

Palladium was up 0.9 percent at $1,080.25. The metal was set to post a weekly gain of 1.6 percent after falling for previous two weeks.

Reporting by Nallur Sethuraman, Sumita Layek, Swati Verma and Arpan Varghese in Bengaluru; Editing by David Gregorio and Alistair Bell