* Technicals see spot gold touching $1,358
* Silver hits over 3-week highs
* Platinum, palladium touch 2-week highs
* SPDR gold rise 1.5 percent on Tuesday
(Adds comment, updates prices)
By Sethuraman N R
Sept 7 Gold rose to a fresh two-and-a-half-week
high on Wednesday after gaining nearly 2 percent in the previous
session, as disappointing U.S. economic data reinforced
expectations the U.S. Federal Reserve will keep rates on hold in
U.S. services sector activity slowed to a 6-1/2-year low in
August amid sharp drops in production and orders, pointing to
slowing economic growth that further diminished prospects for a
near-term interest rate hike.
The U.S. non-manufacturing new orders index for August fell
to its lowest since December 2013.
Spot gold was up 0.1 percent at $1,351.10 per ounce
by 0643 GMT. The metal touched a high of $1,352.65, its best
since Aug. 19.
U.S. gold futures rose 0.2 percent to $1,356.
The market sentiment has certainly changed since Tuesday's
poor economic data, MKS PAMP Group trader Alex Thorndike said.
The U.S. dollar remains on the backfoot as the chances of a Fed
rate hike in September have diminished even further, he added.
Spot gold may extend its gains to $1,358 per ounce, as it
has cleared a resistance at $1,347, according to Reuters
technical analyst Wang Tao.
"Markets are expected to be quiet till European Central
Bank's interest rate decision on Thursday," said Kent Li, deputy
in-charge for bullion desk, Wing Fung Precious Metals.
"We could see gold move in the $1,350-$1,360 range with a
support at $1,345 and resistance at $1,365."
The dollar took a tumble and Asian stocks rose to one-year
highs on Wednesday after surprisingly weak U.S. services sector
"The recent rally is impressive. But absence of a rate hike
in September may largely be priced into gold. Also there has
been some tightening of real yields," HSBC analyst James Steel
said in a note.
"This may limit gains just as ongoing geopolitical tensions,
public discontent, and threats to free trade and globalization
will likely support the bullion markets. This leaves us price
positive but likely with limited upside."
Holdings of SPDR Gold Trust, the world's largest
gold-backed exchange-traded fund, rose 1.52 percent, its best
one-day gain since July 5, to 952.14 tonnes on Tuesday from
937.89 tonnes on Friday.
The Perth Mint's sales of gold and silver products fell in
August, in line with a trend reported by precious metal
businesses worldwide, the mint said in a blog post on its
website on Wednesday.
Spot silver was down 0.6 percent after touching an
over three-week high of $20.13.
Platinum rose 0.2 percent to $1,097.80. It hit a
2-week high of $1,105.80. Palladium was up 0.8 percent
and touched an over two-week high of $708.40.
(Reporting by Nallur Sethuraman in Bengaluru; Editing by
Richard Pullin and Amrutha Gayathri)