PRECIOUS-Gold up on weaker dollar, but heads for first weekly loss in 6

* Gold, silver, palladium set for first weekly drop in six Platinum on track for sixth weekly gain

* Analyst says cautious on gold as dollar weakness overdone

(Adds comment, updates prices) Jan 19 (Reuters) - Gold prices rose on Friday, supported by a weaker dollar amid worries about a possible U.S. government shutdown, but the metal was still on track for its first weekly drop in six weeks.

Spot gold was up 0.4 percent at $1,332 an ounce by

0659 GMT. On Thursday, it touched its weakest level since Jan. 12 at $1,323.70, having fallen from recent four-month highs. Spot gold has declined 0.5 percent so far this week, its worst week since early December.

U.S. gold futures were up 0.4 percent at $1,332.

The U.S. dollar fell amid worries over a possible U.S. government shutdown. The dollar index was down 0.1 percent at

90.406 on Friday.

Legislation to stave off an imminent federal government shutdown encountered obstacles in the U.S. Senate late on Thursday, despite the passage of a month-long funding bill by the House of Representatives hours earlier. "The overall run in gold has been overdone ... People have to be careful with further allocations in gold and other asset classes as well for now," said Mark To, head of research at Hong Kong's Wing Fung Financial Group. "The overall weakness in U.S. dollar is over ... I can't be more cautious on gold prices at the moment." The dollar has fallen since 2017 largely on expectations central banks besides the Federal Reserve are seeking to end their policy of ultra low, even negative, rates that they adopted to combat the 2008 global financial crisis and the recession that followed. The Fed should raise interest rates three to four times in both 2018 and 2019, Cleveland Fed President Loretta Mester said on Thursday, a pace that is a bit faster than many of her fellow policymakers prefer. "The fundamentals remain the same with the large trading range remaining intact at $1,200 to $1,400, with no major change in global political tensions or rate hike outlook," To said. Spot gold is still targeting $1,311 per ounce, as suggested according to Reuters technical analyst Wang Tao. The recent pull-back from over four-month highs has likely tested speculative longs and should be viewed as a healthy retracement before the metal makes a further test toward $1,350, MKS PAMP Group trader Sam Laughlin said.

Meanwhile, holdings of SPDR Gold Trust , the world's

largest gold-backed exchange-traded fund, rose 1.42 percent to 840.76 tonnes on Thursday from Wednesday. Among other precious metals, silver advanced 0.5 percent to $17.01 per ounce.

Platinum climbed 0.1 percent to $1,001.74, while palladium gained 0.8 percent to $1,107.

(Reporting by Nallur Sethuraman in Bengaluru; Editing by Richard Pullin and Joseph Radford)