By A. Ananthalakshmi
SINGAPORE (Reuters) - Gold is set for its biggest weekly drop in three weeks but declines have been kept in check by a partial U.S. government shutdown that threatens to hurt economic growth, increasing bullion's safe-haven appeal.
The metal's 1.2 percent loss for the week so far is largely due to a single massive Comex sell order on Tuesday that sent the price below $1,300 an ounce, but it quickly recovered as the budget impasse in Washington dragged on.
On Friday, spot gold gained 0.2 percent to $1,319.30 an ounce by 0620 GMT.
With Chinese markets closed for the National Day holiday through Monday and no major U.S. data expected due to the shutdown, gold kept to a tight range during Asian hours on Friday.
"I think it is very sensitive to sharp dips right now as there is no China to support," said one precious metals trader in Hong Kong, adding that any news on the Federal Reserve's tapering of its monetary stimulus could also dampen sentiment.
Gold traders have been closely monitoring U.S. data on the labour and housing markets to judge the strength of the economy, which could decide when the Federal Reserve will begin cutting back on its bullion-friendly stimulus measures.
Many federal agencies have stopped collecting and publishing data after Congress failed to agree on a spending bill.
Fed officials said this week that the lack of data was making it difficult to read the economy and the Fed might have to keep monetary policy easy for longer to help offset the harm caused by political fighting in Washington.
The shutdown of the U.S. government appeared likely to drag on for another week and possibly longer and there are growing fears in financial markets about the more significant mid-October deadline to raise the U.S. debt ceiling.
ANZ said gold was "a little directionless" in the $1,300-1,320 range due to the absence of strong safe-haven bids and outflows from bullion-backed exchange traded funds.
"It will be difficult to justify a gold rally in this environment," ANZ analysts said in a note. "The obvious caveat is a deterioration in the debt-ceiling negotiations that leads to a substantial re-evaluation of U.S default risk."
Platinum gained more than 1 percent to $1,379.24 an ounce due to a strike at Anglo American Platinum's (AMSJ.J) South African operations. The miner said it was losing an average of 3,100 ounces of production a day.
Silver and palladium also climbed higher on Friday.
Precious metals prices 0620 GMT
Metal Last Change Pct chg YTD pct chg Volume
Spot Gold 1319.30 2.61 +0.20 -21.21
Spot Silver 21.70 0.12 +0.56 -28.34
Spot Platinum 1379.24 16.94 +1.24 -10.15
Spot Palladium 701.22 4.22 +0.61 1.33
COMEX GOLD DEC3 1319.50 1.90 +0.14 -21.26 9410
COMEX SILVER DEC3 21.74 -0.05 -0.23 -28.28 2198
COMEX gold and silver contracts show the most active months
(Editing by Alan Raybould)