PRECIOUS-Gold scales over 6-1/2-month high on global growth fears

(Adds comments, updates prices)

* Market awaits Fed Chair Powell views, non-farm payroll data

* SPDR Gold holdings rise on Wednesday

* Markets now wagering on U.S. Fed rate cut

BENGALURU, Jan 4 (Reuters) - Gold prices hit their highest in 6-1/2 months on Friday as volatile equity markets on the back of weak U.S. data heightened fears of a global economic slowdown, propelling the safe-haven metal towards a potential third straight weekly gain.

Spot gold was up 0.2 percent at $1,296.35 per ounce, as of 0301 GMT, having earlier touched $1,298.42, its highest since mid-June.

The yellow metal has risen over 1 percent so far this week.

U.S. gold futures were up about 0.4 percent at $1,299.50 per ounce.

"Concerns about tepid global economic growth and volatility in risk assets is likely to keep the safe-haven asset - gold - in flavour," said Sugandha Sachdeva, vice-president of metals, energy and currency research, Religare Broking Ltd.

Global markets were on edge on Friday as dire U.S. economic data slammed Wall Street and pushed investors to bet the Federal Reserve could reverse its policy tightening before the end of this year.

A survey data from Institute for Supply Management (ISM) showed that U.S. manufacturing activity slowed sharply to a two-year low in December, suggesting the economy was probably not immune to slowing growth in China and Europe.

"The market is taking a big step further (for gold). The Fed funds futures market is now pricing in a 40 percent chance of a rate cut by the end of this year," said Amit Kumar Gupta, portfolio management services head, Adroit Financial Services in New Delhi.

Gold is highly sensitive to rising U.S. interest rates, which lift the opportunity cost of holding non-yielding bullion.

Investors had expected the U.S. Fed to stay on its tightening path after three hikes last year, but the ongoing trade war and recent disappointing corporate earnings have put those expectations to rest.

Investors will be looking for cues about interest rate hikes from a discussion between Federal Reserve Chair Jerome Powell and former Fed Chairs Janet Yellen and Ben Bernanke on Friday.

Meanwhile, markets are awaiting the closely watched December payrolls report later in the day.

Indicating investor appetite for gold, holdings of SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, rose to 795.31 tonnes, their highest since early August.

"Gold prices seem to tread higher towards $1,325 per ounce in the near term ... Prices are likely to remain buoyant, but may witness some profit-booking at higher levels," Sachdeva added.

Among other precious metals, palladium gained 0.4 percent to $1,268.24 per ounce.

Silver was up 0.5 percent at $15.82 per ounce, while platinum gained 0.6 percent to $802.90. (Reporting by Nallur Sethuraman and K. Sathya Narayanan in Bengaluru, Editing by Richard Pullin and Sherry Jacob-Phillips)