PRECIOUS-Gold rises on safety bids as S&P dips for 2nd weekly gain

* Oil rally and falling U.S. equities help gold turn higher * US wholesale inventory down, economists lower forecast * Bullion ends near key 55-day moving average resistance * Coming up: U.S. Federal Budget Monday (Adds technical analyst comment, updates market activity) By Frank Tang and Jan Harvey NEW YORK/LONDON, Aug 9 (Reuters) - Gold rose on Friday on an oil rally and falling U.S. equities, with bullion notched a second consecutive weekly gain due to uncertainty over when the U.S. Federal Reserve will reduce its economic stimulus policy. Speculation the central bank could start tapering its $85 billion monthly bond purchases as soon as next month knocked gold to a three-week low earlier this week. But there was no consensus among Fed policymakers about the exact timing on when to end the program. On Friday, government data showed U.S. wholesale inventories unexpectedly fell for a second straight month in June, prompting economists to trim their growth estimates. Gold reversed earlier losses as U.S. equities fell and were set for their worst week since June. The S&P 500 index was off 0.3 percent. Investors found few reasons to buy with equity prices near record levels. "We are seeing some flight-of-safety bids in gold as the S&P turns. That has a lot to do with the recognition that (the Fed's quantitative easing) will continue as the economic numbers are not supporting the reduction of QE," said Jeffrey Sica, chief investment officer of Sica Wealth Management, which oversees more than $1 billion in client assets. Oil prices gained amid supply disruptions in the Middle East and signs of rising Chinese demand, increasing bullion's inflation-hedge appeal. Spot gold was up 0.3 percent at $1,314.91 an ounce 3:37 p.m. EDT (1937 GMT). For the week, gold is also up around 0.3 percent for its fourth weekly gain in the past 5 weeks. On chart, gold ended just below a key resistance at its 55-day average around $1,319 an ounce. "Prices appear to be working on some type of bullish reversal formation ... We think gold is set up to break above resistance in the mid-$1,300 region, taking prices over $1,450," said Mark Arbeter, chief technical strategist at S&P Capital IQ. U.S. gold futures for December delivery settled up $2.30 an ounce to $1,312.20, with trading volume at below 100,000 lots, preliminary Reuters data showed, more than halved its 30-day average and on track to be its lowest turnover in almost two months. As a gauge of investment demand, gold-backed exchange-traded funds had more outflows, however. Holdings of the world's largest gold ETF SPDR Gold Trust fell 1.2 tonnes on Thursday. Among other precious metals, silver rose 1.5 percent to $20.51 an ounce, while platinum was up 0.8 percent at $1,498.50 an ounce, and palladium added 0.6 percent to $740.22 an ounce. 3:37 PM EDT LAST/ NET PCT LOW HIGH CURRENT SETTLE CHNG CHNG VOL US Gold DEC 1312.20 2.30 0.2 1304.10 1316.50 90,521 US Silver SEP 20.407 0.214 1.1 20.045 20.580 47,697 US Plat OCT 1500.60 9.00 0.6 1484.30 1505.30 10,841 US Pall SEP 741.00 2.45 0.3 736.00 743.10 2,867 Gold 1314.91 3.52 0.3 1305.83 1316.50 Silver 20.510 0.310 1.5 20.120 20.560 Platinum 1498.50 11.50 0.8 1485.00 1501.50 Palladium 740.22 4.22 0.6 739.00 741.00 TOTAL MARKET VOLUME 30-D ATM VOLATILITY CURRENT 30D AVG 250D AVG CURRENT CHG US Gold 96,925 208,267 188,357 24.28 2.15 US Silver 62,351 46,256 54,088 26.86 -0.54 US Platinum 11,063 10,016 12,449 21.69 0.00 US Palladium 3,782 3,728 5,344 (Additional reporting by A. Ananthalakshmi in Singapore; Editing by Jeffrey Benkoe and Grant McCool)