* Spot gold down about 2.5 pct for the week
* Spot gold may drop more to $1,239/oz - Technicals
* Market awaits U.S. payrolls
(Adds comment, weekly milestone; updates prices)
By Apeksha Nair
Dec 8 (Reuters) - Gold edged up in Asian trade on Friday as
investors resorted to bargain hunting after the yellow metal
dropped below its recent trading range to hit the lowest in more
than four months overnight.
Spot gold was up 0.2 percent at $1,249.04 an ounce,
by 0652 GMT, after hitting its lowest since July 26 at $1,243.71
in the previous session.
The metal was down for a third straight week, headed for its
biggest weekly decline since early May.
U.S. gold futures were 0.2 percent lower at
$1,250.80.
"Even as the dollar is firmer, there seems to be a bit of
bargain hunting around. I do, however, think that the pressure
is on the downside and rallies will still be sold," a Hong
Kong-based trader said.
The dollar inched higher on Friday, as the passage of a bill
to temporarily extend U.S. government funding raised investors'
optimism that a tax reform bill would also pass, and eased fears
of a government shutdown for now.
Investors were, however, wary of the possibility of
escalating tensions in the Middle East after President Donald
Trump recognised Jerusalem as the capital of Israel.
"Gold might have found some support in that but it seems to
be just the dollar strength across the board now heading into
the end of the year," the trader said.
Markets are eyeing U.S. non-farm payrolls report due later
in the day, which will be last employment report before the
Federal Reserve meeting next week at which the bank is expected
to raise benchmark interest rates.
Higher U.S. interest rates tend to boost the dollar, making
greenback-denominated gold more expensive for holders in other
currencies.
"The upcoming U.S. data is something which everyone is
looking at and completely ignoring the fact that the situation
in the Middle East has far larger potential of becoming
explosive," said Naeem Aslam, London-based chief market analyst
at Think Markets.
Meanwhile, Asian shares rallied for a second session on
Friday on upbeat economic data, and cryptocurrency bitcoin shot
above $16,600 on the Bitstamp exchange to its highest ever.
"Market-watchers are likely positioning for a FOMC rate hike
next week. Overnight, the improvement in risk appetite
considering the postponing of the U.S. partial government
shutdown and further progress in Brexit talks should buoy market
sentiment into the next week," said OCBC analyst Barnabas Gan.
Spot gold may drop more to $1,239 per ounce, according to
Reuters technicals analyst Wang Tao.
Silver rose 0.4 percent to $15.78 an ounce, but was
headed for a third week of losses.
Platinum climbed 0.5 percent to $896.40 an ounce, but
was set to post its biggest weekly fall since March.
Palladium was 0.3 percent higher at $1,016.20.
(Reporting by Apeksha Nair in Bengaluru; Editing by Sherry
Jacob-Phillips and Vyas Mohan)