* Gold up 1.6 percent this week
* Healthcare vote likely later Friday afternoon
* Palladium rises to 2-year highs (Adds comments, updates prices, Fed news, adds NEW YORK dateline)
By Devika Krishna Kumar and Peter Hobson
NEW YORK/LONDON, March 24 (Reuters) - Gold rose on Friday, notching its second straight week of gains as concern about the ability of U.S. President Donald Trump to push legislation through Congress pressured the dollar, making bullion cheaper for holders of other currencies.
The dollar remained near seven-week lows against a basket of currencies .DXY ahead of a vote on a healthcare bill, formally called the American Health Care Act. USD/
Gold, seen as a safe haven asset, has benefited from falls in the dollar, U.S. bond yields and stocks this week as Trump's difficulty in passing healthcare reform has undermined faith that he can deliver on promises of tax cuts and investment. .DXY FRX/ MKTS/GLOB
Spot gold XAU= was up 0.2 at $1,247.66 an ounce by 2:10 p.m. EDT (1810 GMT). The metal has risen 1.6 percent this week and on Thursday touched $1,253.12, its highest since Feb. 28. It rose nearly 2 percent a week earlier.
U.S. gold futures GCcv1 settled at $1,248.50 an ounce.
Trump has set up a showdown with lawmakers by demanding support for the healthcare bill in a vote on Friday afternoon. seems to have done a little bit better as the day wore on as it's becoming pretty sure that this bill is not gonna pass ... That's a driving force all the way across," said Bill O'Neill, co-founder of LOGIC Advisors
"The way we're looking at gold is - day to day a lot can happen that causes emotional movement in the market but looking forward, we're bullish and I'm looking for $1300 and I think you have to look at the fact that a lot of things can happen that ultimately will prove supportive for gold."
Failure to pass the bill could push gold through technical resistance at around $1,250, analysts said.
"If the market can consolidate above $1,250 in the coming days we could see an attempt at the 200-day moving average of $1,259.50," Tim Brown at MKS PAMP wrote in a note.
Away from Congress, focus was also on the U.S. Federal Reserve. Three Fed officials, Charles Evans, James Bullard and William Dudley, spoke on Friday. Federal Reserve's delicate interest-rate hikes are necessary given the economy is stable and any further fall in unemployment could lead to an inflation run-up, one of the most influential U.S. central bankers, Dudley, said. prices have been supported by expectations that the Fed will raise interest rates more slowly than some had feared. Higher rates tend to pressure gold by lifting the opportunity cost of holding non-yielding bullion and boosting the dollar, in which gold is priced.
Bullard said on Friday that just one more rate hike this year would be appropriate following a rise earlier this month, but that he would not fight a second one. Dudley said that "delicate" policy changes were necessary. did not address monetary policy or the economic outlook in Washington. XAG= was up 1 percent at $17.91 an ounce. Platinum XPT= was 0.6 percent higher at $964.50 an ounce.
Palladium XPD= was up 1.4 percent at $810 an ounce, having hit a two-year high of $815.40 earlier in the session.
The metal used in catalytic converters that curb pollution from vehicle exhausts has risen about 5 percent this week thanks to strong economic data and demand from the automobile sector.