Gold pared early gains on Friday as investors took profits after data showed that economic growth and consumer sentiment have weakened but not enough to prompt the U.S. Federal Reserve to take further stimulative action.
Bullion was up only 0.2 percent for the day but still on track for its biggest weekly gain in eight weeks, boosted by a pledge by the head of European Central Bank to preserve the euro and hopes that the Fed will explore new tools to promote growth in the U.S. economy.
After rising nearly 1 percent earlier in the session, gold sharply trimmed its gains after data showed U.S. GDP slowed in the second quarter from the first quarter, and as U.S. consumer sentiment in July fell to its lowest level of the year.
"We started off reasonably well supported carrying over from yesterday. But we have pared gains since then because the numbers are not as quite as disappointing, and some of the premium in the gold market has already built in," said James Steel, metals analyst at HSBC.
Gold has gained almost 3 percent during its four-day rally.
The metal on Thursday broke above its 100-day moving average for the first time since May 1, and it has showed signs that better hopes of central-bank actions could lift bullion out of its trading range during the last three months.
Spot gold was up 0.2 percent at $1,617.89 an ounce by 11:56 a.m. EDT (1556 GMT), down from a high of $1,629.10 which marked a five-week high.
U.S. gold futures for August delivery were up $2.30 at $1,617.50 an ounce. Trading volume was on pace to finish sharply higher than its 30-day average, preliminary Reuters data showed.
Analysts said that active trading a day after COMEX August options expiry and a decent contract rollover to December from August ahead of first-notice day next week suggest bullion could extend its recent rally.
Gold has been seesawing between $1,525 and $1,640 in the last three months, partly due to the Fed's ambiguity on further monetary easing.
The metal has been particularly sensitive to moves in the wider financial markets in the absence of direction from physical demand, which has been weak in recent months.
PHYSICAL BUYERS ABSENT
Physical gold traders in India, one of the top bullion consumers, stayed on the sidelines after prices stayed in the vicinity of their highest level in four weeks, driving away jewelers seeking to stock up for upcoming Hindu festivals.
Among other metals, silver was unchanged at $27.50 an ounce from Thursday's close, after hitting a three-week high of $27.85.
Spot platinum rose 0.2 percent to $1,402.24 an ounce.
Its discount to spot gold increased to around $215 an ounce in the previous session, its deepest since early December. Spot palladium was up 0.5 percent at $567.49 per ounce.
Prices at 11:56 a.m. EDT (1556 GMT)
LAST NET PCT YTD
CHG CHG CHG
US gold 1617.40 2.30 0.1% 3.2%
US silver 27.450 0.004 0.0% -1.7%
US platinum 1406.50 0.90 0.1% 0.5%
US palladium 570.40 0.50 0.1% -13.1%
Gold 1617.89 2.50 0.2% 3.5%
Silver 27.50 0.00 0.0% -0.7%
Platinum 1402.24 2.34 0.2% 0.7%
Palladium 567.49 2.74 0.5% -13.0%
Gold Fix 1618.25 -0.50 0.0% 2.8%
Silver Fix 27.73 -8.00 -0.3% -1.6%
Platinum Fix 1410.00 7.00 0.5% 2.1%
Palladium Fix 574.00 1.00 0.2% -9.7%