* Speculators raise longs for gold first time in 3 weeks
* Palladium drops back from 7-week highs hit on Friday (Updates prices)
By Sethuraman N R
Oct 3 (Reuters) - Gold edged lower on Monday on a firmer dollar and a gain in equities, with the yellow metal losing its safe-haven appeal as concerns about Deutsche Bank's health eased.
Spot gold XAU= was down 0.1 percent at $1,315.06 an ounce as of 0740 GMT, while U.S. gold futures GCcv1 rose 0.1 percent to $1,318.60.
Deutsche Bank DBKGn.DE is trying to reach a settlement with U.S. authorities demanding a fine of up to $14 billion for the misselling of mortgage-backed securities. the news that Deutsche Bank is going to be settling at around $5 billion dollars, it is going to be taken fairly positive by the market as we had seen a lot of selling in the equities on Friday," said Jeffrey Halley, senior market analyst at OANDA.
Gold is sidelined at the moment as "everything seems to have calmed down substantially including Deutsche Bank and OPEC production cuts," Halley said.
OANDA sees gold trading sideways between $1,315 and $1,325 an ounce for now, he said.
The absence of top consumer China, where markets are shut from Oct. 1-9 for the Chinese National Day holidays, is expected to keep trading volumes low. see no major investor enthusiasm for gold and prices may have to ease to test the $1,300-$1,310 level before support materializes," said HSBC analyst James Steel in a note.
"Gold's best near-term chance of a rally would more likely come from an oil surge or a deterioration of the financial situation in Europe," Steel said.
U.S. consumer spending fell in August for the first time in seven months, while inflation showed signs of accelerating, mixed signals that could keep the Federal Reserve cautious about raising interest rates. data usually puts pressure on gold prices, because investors raise bets on a U.S. interest rate hike that would increase the opportunity cost of holding non-yielding bullion.
Hedge funds and money managers raised their net long positions in COMEX gold for the first time in three weeks in the week to Sept. 27. of the SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, fell 0.13 percent to 947.95 tonnes on Friday. GOL/ETF
Silver XAG= fell 0.2 percent to $19.12 an ounce,
platinum XPT= slipped 0.3 percent to $1,020.80, and palladium XPD= was down 0.2 percent at $718 after touching a seven-week high on Friday.