* Gold on track for third weekly fall, down 2.7 pct
* Technical indicators suggest gold to fall further
* Dollar rises on tax reform, funding bill
* Market awaits U.S. payrolls at 1330 GMT
(Updates throughout, adds London dateline) LONDON, Dec 8 (Reuters) - Gold prices steadied on Friday but were on track for their biggest weekly fall since May ahead of U.S. employment data later that could influence the pace of U.S. interest rate rises. Gold this week broke below a recent trading range and tumbled through technical levels to its lowest since July as progress on U.S. tax reform fueled optimism about the U.S.
economy and boosted the dollar. 1/2MKTS/GLOB 3/8
"You can put it down to the strength of the dollar and the ebullience of investors regarding equities and all things risk-on," said ETF Securities analyst Martin Arnold. "When in such a positive mindset investors don't look for defensive assets like gold." The dollar was given an extra boost on Friday after a funding bill eased fears of a U.S. government shutdown this month. A stronger dollar makes bullion more expensive for holders of other currencies and can dampen demand.
Spot gold was down 0.1 percent at $1,245.66 an ounce
at 1109 GMT, close to Thursday's low of $1243.71, the weakest since July 26. It had fallen 2.7 percent this week, its third consecutive weekly fall and the biggest since early May.
U.S. gold futures were 0.4 percent lower at
$1,247.80. Selling was triggered after gold broke below $1,260, the bottom of its trading range since September, and plunged below its 200-day moving average for the first time since July. Technical support is now at $1,250 and a fibonacci level at $1,240.90 but momentum indicators suggest that gold could fall to $1,204.90, the July low, said analysts at ScotiaMocatta. However, ETF Securities' Arnold said prices were supported Korea and the Middle East, and a potential correction in equity valuations. He said gold's fair value was $1,260-$1,280.
Gold is traditionally seen as a safe investment in times of uncertainty. Investors were looking ahead to U.S. non-farm payrolls data at 1330 GMT. The U.S. Federal Reserve is expected next week to announce a rise in interest rates and offer guidance on the pace of further increases. Strong payrolls would support the case for aggressive rate rises. Gold is sensitive to rising interest rates because they push up bond yields, reducing the appeal of non-yielding gold, and tend to boost the dollar.
Among other precious metals, silver was up 0.4
percent at $15.78 but down 4 percent this week.
Platinum was 0.1 percent lower at $892.20 an ounce
and on track to fall nearly 5 percent this week, its biggest weekly loss in nine months.
Palladium was up 0.1 percent at $1,013.75 an ounce.
(Additional reporting by Apeksha Nair in Bengaluru; Editing by Gareth Jones)