PRECIOUS-Gold eases as strong China factory data prompts profit booking

* Palladium rises for the fourth straight week

* The Caixin/Markit Manufacturing PMI for Oct. rises

* Applications for unemployment benefits in U.S. increase (Updates prices)

Nov 1 (Reuters) - Gold eased on Friday as strong Chinese factory data prompted investors to cash in some of the previous session’s more than 1% gains, while investors weighed up the prospect of more Federal Reserve rate cuts.

Spot gold was a shade lower at $1,513 per ounce as of 0817 GMT, while U.S. gold futures were unchanged at $1,515.30 per ounce. Spot gold is set to rise about 0.6% on a weekly basis, after a 1% gain the previous week.

“We are seeing a little bit of profit booking in gold this morning after the strong China manufacturing data, but I don’t see gold falling below $1,460 as the fundamentals still look quite strong,” said Kunal Shah, head of research at Nirmal Bang Commodities in Mumbai, India.

China’s factory activity expanded at the fastest pace in over two years in October as new export orders rose and plants ramped up production, a private business survey showed on Friday.

The better-than-expected results stand in contrast with an official survey published on Thursday, which showed China’s factory activity shrank for the sixth straight month in October.

Meanwhile, the U.S. Federal Reserve on Wednesday lowered its policy rate by a quarter of a percentage point. But the central bank signalled there would be no further cuts unless the economy takes a turn for the worse.

“The gold market looks pretty strong in the near term given fresh uncertainty around the trade war and economic data from the U.S. confirming the slowdown still lingering,” said Janie Simpson, managing director at ABC Bullion.

“Considering the economic slowdown still existing, investors are expecting more rate cuts even though the Fed has pushed a pause button.”

A flattening yield curve indicates market participants believe the U.S. Federal Reserve may be pausing its interest rate cuts too soon.

Asian shares fell on Friday on fresh concerns over Sino-U.S. trade prospects and ahead of U.S. economic data, while the dollar eased against major rivals.

A near 16-month long trade war between China and the United States has slowed global trade, stirred recession fears for some economies and roiled financial markets.

Chile’s decision to cancel the Nov. 16-17 Asia-Pacific Economic Cooperation summit disrupted plans for the two to sign an interim trade deal. U.S. President Donald Trump said they would soon announce a new site to sign a “Phase One” agreement.

Holdings of the largest gold-backed exchange-traded fund (ETF), New York’s SPDR Gold Trust, fell 0.19% on Wednesday from Tuesday.

Among other metals, silver was unchanged at $18.13 per ounce and platinum inched 0.1% higher to $932.73, while palladium dipped 0.2% to $1,791.42 an ounce. Palladium was set to record a fourth straight week of gains. (Reporting by Diptendu Lahiri in Bengaluru; Editing by Rashmi Aich and Jan Harvey)