PRECIOUS-Gold heads for weekly gain on weak US economic data, softer dollar

June 6 (Reuters) - Gold prices rose on Friday and headed for weekly gains, as weaker U.S. economic data bolstered demand and a softer dollar lent further support, while investors awaited U.S. payroll data for clues on the Federal Reserve's monetary policy trajectory.

FUNDAMENTALS

Spot gold XAU= was up 0.3% at $3,361.36 an ounce, as of 0036 GMT. Bullion is up 2.3% for the week so far.

U.S. gold futures GCcv1 also climbed 0.3% to $3,384.40.

The U.S. dollar index .DXY headed for a weekly loss, making gold more affordable for holders of other currencies. USD/

The number of Americans filing new applications for unemployment benefits increased to a seven-month high last week.

Investors are now awaiting U.S. nonfarm payroll data due at 12:30 GMT, after a slew of data throughout this week highlighting labor market softness.

Economists polled by Reuters forecast nonfarm payrolls increased by 130,000 jobs in May, down from 177,000 in April, while the unemployment rate is expected to remain steady at 4.2%.

Meanwhile, Fed policymakers indicated on Thursday that inflation remains a greater concern than labor market cooling, suggesting a prolonged hold on monetary policy adjustments.

U.S. President Donald Trump and Chinese leader Xi Jinping engaged in a rare leader-to-leader call on Thursday, addressing escalating trade tensions and disputes over critical minerals, though key issues remain unresolved.

Wall Street closed sharply lower amid a dispute between Trump and billionaire Elon Musk. MKTS/GLOB

Gold, often seen as a safe-haven asset, tends to perform well during economic uncertainty and in low-interest-rate environments.

Elsewhere, spot silver XAG= fell 1.2% to $35.71 per ounce, still hovering near 12-year high, platinum XPT= rose 0.3% to $1,034.34, while palladium XPD= was steady at $1,005.88. All three metals were headed for weekly gains.