* European shares down after Nice attack
* Wall Street eases from record highs
* Palladium touches highest since early November (Updates prices; adds comment, second byline, NEW YORK dateline)
By Marcy Nicholson and Clara Denina
NEW YORK/LONDON, July 15 (Reuters) - Gold fell on Friday and was set for its first weekly loss since May on improving global risk sentiment and a stronger dollar after better-than-expected U.S. data.
European shares edged lower after at least 84 people died in an attack in France, while U.S. Treasury yields jumped as strong economic data renewed prospects of a Federal Reserve interest rate hike. U.S. stocks eased from record highs. MKTS/GLOB
Spot gold XAU= was down 0.5 percent at $1,327.91 an ounce by 2:48 p.m EDT (1848 GMT), while U.S. gold GCcv1 settled down 0.4 percent at $1,327.40 per ounce.
U.S. retail sales rose 0.6 percent in June, compared to an expected 0.1 percent rise. the short term, we can see some more pressure towards $1,300 as the focus is back on the U.S. after strong economic data, which increases the probability of a rate hike before the end of the year," Commerzbank (DE:CBKG) analyst Carsten Fritsch said.
Higher U.S. rates tend to damage gold prices because they increase the opportunity cost of holding non-yielding bullion.
After six weeks of gains, the longest rally since March 2014, the metal has come under pressure this week, down 2.8 percent so far. It was hit by strong U.S. non-farm payrolls data and as uncertainty around the implications of Britain's Brexit vote eased with the formation of a new government.
"Investors are taking profits, but $1,300 is now a floor for gold and that is going to hold moving forward," ING Bank senior strategist Hamza Khan said.
The dollar JPY= was set for its biggest weekly gain against the yen in 17 years and was up 0.5 percent .DXY versus a basket of six currencies, making gold more expensive to foreign holders. FRX/
In Asia, consumers took profits on their gold holdings after last week's price rally helped bullion hit its highest in more than two years. other precious metals, spot palladium XPD= touched its highest since early November at $652 an ounce.
"We favor industrially-oriented precious metals, like platinum and palladium, which should see larger market deficits," said UBS Chief Investment Office Wealth Management in a note, pointing out low interest rates and abundant central bank liquidity.
"Our favored precious metal allocation is 60 percent palladium, 30 percent platinum and 10 percent gold."
Spot silver XAG= was down 1.3 percent at $20.03 an ounce. It was marginally lower for the week, on track for its first weekly loss in seven.
Spot platinum XPT= slipped 1 percent at $1,088.