Gold backs off two-week high, dollar gains ground

Gold futures titled lower off August 28 highs, still on track for the first weekly profit in three, as the dollar index gained ground for the day, following earlier data from China, the world's largest metals consumer, and the US. 

As of 01:58 GMT, gold futures due in December barely inched down to $1,207.60 an ounce away from two-week highs, while the dollar index rose 0.19% to 94.70 against a basket of major rivals. 

Earlier Chinese data showed the unemployment rate down to 5.0% from 5.1%, while retail sales rallied 9% y/y, slowing down from 8.8% in July. 

China's industrial output rose 6.1% y/y in August, up slightly from 6.0%, while fixed-income investments rose 5.3%, slowing down from 5.5%. 

US Retail Sales, Industrial Data 

Earlier US data showed retail sales rose 0.1%, slowing down sharply from 0.7% in July, and missing estimates of 0.4%. 

Import prices fell 0.6% m/m, compared to no change in July, while analysts expected a 0.2% drop. 

US industrial production rose 0.4% in August, same as July, and beating estimates of a 0.3% increase. 

The capacity utilization rate rose to 78.1% from 77.9% in July, missing  estimates of 78.3%. 

University of Michigan released its survey on consumer sentiment, showing a surge to 100.8 in September, the best in six months, from 96.2 in August, beating estimates of 96.7. 

World Gold Council  

The World Gold Council recently forecast an increase of demand on the yellow metal in the second half of 2018 as inflation rises and the global trade war takes firmer shape and hurts currencies. 

Despite similar concerns in the first half of the year, gold prices were stymied by dollar's strength as the Federal Reserve tightened monetary policy on the back of strong US data.

Otherwise, Gold holdings at SPDR Gold Trust, the world's largest gold-backed investment fund, fell 2.65 tonnes on Thursday to a total of 742.53 tonnes, the lowest since February 2016, with gold prices marking the fifth monthly decline in a row in August, the longest such streak in over five years.