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Gold rose on Friday on the way to a second weekly gain as the US dollar was subdued by weak US economic data and hopes of a breakthrough in the US-China trade dispute, with a darkening global economic outlook bolstering bullion.

Spot gold was up 0.3 per cent at $US1,327.40 per ounce or about 0.5 per cent higher during last week.

US gold futures settled down 0.4 per cent at $US 1,332.80 per ounce.

The metal had fallen about 1 per cent on Thursday following the release of minutes from the US Federal Reserve’s last policy meeting, which painted a less dovish picture than expected.

‘Gold should be doing a little better, because there are possibilities of a trade deal, which would mean the (US) dollar could weaken; the US economy is also slowing quite markedly, that should keep interest rates fairly dormant,’ INTL FCStone analyst Edward Meir said.

Higher rates reduce investor interest in non-yielding bullion.

The US dollar index was little changed versus six other major currencies on Friday, but was set for its biggest weekly fall in a month, bolstering the appeal of gold.

The US currency, which has been a refuge for investors during the US-China trade dispute, has come under pressure on signs of a breakthrough in talks.

Also helping the case for gold, new orders for US-made capital goods unexpectedly fell in December, reviving hope that the Fed would halt its 2019 rate-increase cycle.

The news added to concerns about a slowdown in Europe and China, which analysts said have prompted increasing interest in gold, considered a safe haven in times of economic and political uncertainty.

However, holdings of SPDR Gold Trust , the world’s largest gold-backed exchange-traded fund, dropped 0.6 per cent to 789.51 tonnes on Thursday.

Natixis analyst Bernard Dahdah said the slight pullback did not signal a shift by gold investors since the levels were still close to highs recorded at the start of 2019.

Elsewhere, palladium gained 1.6 per cent to $US1,492.50 per ounce.

The autocatalyst metal was on track for a third straight week of gains, up about 4.3 per cent.

Platinum rose 2.5 per cent to $US839.50, and was set for its best week since early November 2018.

Silver was up 0.6 per cent to $US15.91 and poised to snap two weekly losses.