PRECIOUS-Gold drops to one-week low as stronger dollar weighs

Brijesh Patel

(Updates prices, adds detail and quotes)

* Gold down 1.3% this week

* Palladium set for eighth straight weekly gain

* Platinum poised for worst week in two months

Sept 27 (Reuters) - Gold slipped to its lowest in a week and was heading for a third weekly fall this month as the dollar hit multi-week highs on Friday, denting bullion's appeal.

Spot gold was down 0.7% at $1,495.07 an ounce by 0954 GMT after touching its lowest since Sept. 19. The metal has declined more than 1.3% over the week.

U.S. gold futures dipped 0.8% to $1,503.90.

"The main reason gold is down is because the U.S. dollar is strengthening to its highest level against the euro in more than two years," said Commerzbank analyst Eugen Weinberg.

"However, we have seen massive exchange-traded fund inflows into gold in the past few days. This shows people are buying on dips and we may see further buying with prices now below $1,500 because the outlook for gold is still bullish."

The dollar index against a basket of rivals climbed to a three-week peak as heightened risks from political tensions in the United States strengthened its safe-haven appeal.

A whistleblower report released on Thursday said that U.S. President Donald Trump abused his position in attempting to solicit Ukraine's interference in the 2020 U.S. election and that the White House tried to "lock down" evidence of his conduct.

On the trade front, meanwhile, China's top diplomat said the country is willing to buy more U.S. products and that trade talks wih the United States would yield results.

This came after Trump praised Chinese purchases and said that a trade deal could come sooner than people thought.

These positive signals on trade lifted European shares, offseting worries over economic growth and rising political risks.

"Barring a major shock ... world recession fears that have central banks running around in circles to ease monetary policy provide more than enough reason to expect gold prices to resume their stunning rally of 2019," FXTM analysts said in a note.

Bullion has risen more than 17% this year, mainly driven by trade tensions and increasingly dovish monetary policy from central banks.

Among other precious metals, silver fell 1.6% to $17.52 an ounce.

Platinum eased by 0.4% to $926.09 and was on track for its worst week in nearly two months.

Palladium dipped 0.7% to $1,657.03 but the auto-catalyst metal was still set to post an eighth consecutive weekly gain. (Reporting by Brijesh Patel in Bengaluru Editing by David Goodman)