Gold climbed on Friday, making gains for two straight weeks for the first time since June, as weak US jobs data and signs of an economic slowdown bolstered the metal's safe-haven appeal.
This week, bullion benefited from higher-than-expected US jobless claims and the Federal Reserve's downgrade of its economic outlook. Last Friday, data also showed US private employers added fewer workers to their payrolls in July than expected.
Gold was largely rangebound this week after the Fed's reassessment, but it finally broke out a 1.5 per cent rally on Thursday, its biggest one-day gain in more than two months. Its alternative-asset appeal also increased due to a stock market swoon as the S&P 500 was down more than three per cent this week.
"A lot of people are starting to embrace the fact that gold had a substantial move above $US1,200, solidifying another possible move to the upside," said Adam Klopfenstein, senior market strategist at MF Global's unit Lind-Waldock.
"It is going to be very hard to give us a real rationale why gold should head lower with a lot of slowdown and uncertainty in the United States," he said.
On Friday, government data showed US retail sales rebounded in July but showed hints of lingering economic softness.
Spot gold was at $US1,213.90 an ounce at 0355 AEST, against $US1,211.20 late in New York on Thursday. US gold futures for December delivery settled 10 cents lower at $US1,216.60.
On Friday, the metal has struggled to build on gains that pushed it to a one-month high at $US1,217.35 in earlier trade. A raft of US data released on Friday, including retail sales, consumer prices and consumer confidence numbers, put a damper on gold's rise.
Higher energy costs did boost US consumer prices by 0.3 per cent, the first rise in four months. But prices outside food and energy climbed just 0.1 per cent, leaving the year-on-year gain, a measure favoured by the Fed, at just 0.9 per cent for a fourth consecutive month.
Analysts said the slightly higher-than-expected CPI initially pressured gold prices due to the increasing likelihood to hike interest rates in the long run.
"The market showed a very muted reaction to CPI and retail sales numbers," said VTB Capital analyst Andrey Kryuchenkov.
"The market is well supported, but at the moment momentum is slowing," he added. "For an immediate push, you will need some more negative macro news or statements... (to spark) another flight to safety."
Gold held firm as the US dollar rose and headed for its strongest weekly performance in almost two years against a basket of currencies.
The correlation between gold and the US currency has been erratic so far this year, as the metal and the dollar both benefited from safe-haven demand due to fears about global growth at times.
Inverted head-and-shoulders?
On technical charts, gold looked bullish after the December contract closed above key resistance at its 50-day moving average at around $US1,214 an ounce on Thursday.
Gold prices could rally to its "shoulder" at a record high $US1,280 an ounce, driven by a bullish inverted head-and-shoulder pattern, said Rick Bensignor, chief market strategist at investment banking group Execution Noble.
Bensignor said the bullish chart pattern, which is still being formed, suggested prices might pull back toward its "head" at around $US1,180-1,190 before the rally to its shoulder.
Investment demand for physically backed gold exchange-traded funds picked up. Holdings of the largest, the SPDR Gold Trust, climbed by nearly 1 tonne on Thursday after rising more than 3 tonnes a day before, its biggest one-day inflow since June 29.
Silver was at $US18.10 an ounce versus $US18.02.
Platinum was at $US1,519.50 an ounce versus $US1,525.50 and palladium at $US475 against $US467.
