* Dollar index falls 0.2 percent
* Tokyo gold futures hit a 4-wk high
* G20 meeting in focus (Updates prices)
By Clara Denina
LONDON, July 19 (Reuters) - Gold edged up on Friday and was on track for its second weekly gain, boosted by a slightly softer dollar following assurances from the U.S. Federal Reserve about its plans for stimulus withdrawal.
Fed Chairman Ben Bernanke eased some market nerves by telling the U.S. Congress this week the central bank’s plans to scale back asset purchases later this year were not set in stone and depended on the strength of the economy.
“It is still unclear whether the Fed’s tapering will start in September or December, and we still need some clarification on that before there will be a clear direction for the dollar and in turn for gold,” Danske Bank analyst Christin Tuxen said.
“At the moment there is not much to drive gold but a few ups and downs in the euro/dollar trade,” she added.
Spot gold rose 0.4 percent to $1,289.06 by 1221 GMT. For the week, gold looks set to gain about 0.5 percent, adding to last week’s 5 percent rise.
U.S. gold futures were up $4.30 at $1,288.60 an ounce.
The dollar gave back Thursday’s gains, while the benchmark 10-year U.S. Treasury yield also eased, making non-interest bearing assets such as gold more attractive.
Market participants were now awaiting a G20 meeting in Moscow over the weekend, which will likely focus on recent financial market volatility.
Attention will then turn towards a series of crucial U.S. economic data, which analysts said will give more clues about the timing of the Fed’s stimulus tapering.
“With a raft of U.S. housing and manufacturing measures next week, this should give the market a little more direction, but a breakout of the ($1,270-$1,300/oz) range may depend on the next U.S. non-farm payrolls read on Aug. 2,” ANZ Research said.
Bullion has slipped more than 20 percent this year, losing its safe-haven appeal after the Fed signalled in June it would look to rein in its $85 billion in monthly asset purchases later this year and halt stimulus altogether by mid-2014.
But the market regained some confidence after a series of comments from the Fed chief this month, attempting a break through strong technical resistance, briefly touching a three-week high of $1,300.61 on Wednesday.
The most active gold futures contract on the Tokyo Commodity Exchange rose to a four-week peak at 4,171 yen ($41.67) a gram, as investors adjusted their positioning ahead of political elections on Sunday.
“It looks like there’s still a lot of shorts in the market ... But if the outflow on the ETF continues, then of course it will be negative for gold,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
As a gauge of investor interest, holdings of the world’s largest gold-backed exchange-traded fund SPDR Gold Trust fell 0.1 percent to 935.17 tonnes on Thursday, the lowest since early 2009.
Silver was little changed at $19.33 an ounce. Palladium fell 0.3 percent to $740.22 an ounce and platinum gained 0.3 percent to $1,415.99 an ounce. (Additional reporting by Lewa Pardomuan in Singapore; editing by Jane Baird and James Jukwey)