Gold recovers from three-week lows as dollar retreats

Gold recovered from three-week lows on Friday aided by the dollar’s retreat after better-than-expected Chinese data and a stronger euro, while traders focused on the Federal Reserve’s guidance on interest rates next week.

Spot gold was up 0.4% to $1,917.49 per ounce by 1031 GMT, after hitting its lowest since August 23 in the previous session. US gold futures gained 0.3% to $1,939.

“We are seeing a consolidation in the euro and the slightly-recovering yuan against the US dollar. This is positive for gold, which is strongly holding above $1,900 per ounce,” said Carlo Alberto De Casa, analyst at Kinesis Money.

“Gold holding above the $1,900-level is positive news as it shows the resilience and investor interest in bullion,” he added.

The dollar slipped 0.2% against its rivals after hitting a six-month peak on Thursday, making gold less expensive for other currency holders.

Data showed China’s factory output and retail sales grew at a faster pace in August, boosting recovery hopes in the world’s top bullion consumer.

Investors focus shifted to the US central bank meeting due next week, in which the Fed is widely expected to leave interest rates unchanged.

“The outlook for rates to be kept high for longer has been keeping non-yielding gold prices under pressure,” said Yeap Jun Rong, a market strategist at IG.

Data on Thursday showed US producer prices increased by the most in more than a year in August while retail sales also beat expectations, boosted by a surge in gasoline prices.

Positive Chinese data supported other precious metals, with silver rising 2% to $23.09 per ounce, platinum gaining 1.3% to $917.68 and palladium up 1.2% at $1,266.59. All three metals are heading for weekly gains.