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Gold prices inched up on Monday as weaker-than-expected economic data from the US and a missile test by North Korea over the weekend pressured the dollar.
Spot gold was up 0.2 per cent at $1,231.06 per ounce at 0529 GMT and hovered just above the 100-day moving average. The yellow metal rose 0.3 per cent on Friday.
US gold futures were up 0.3 per cent at $1,230.90 an ounce.
North Korea said on Monday it had successfully conducted a newly developed mid-to-long range missile test on Sunday, supervised by leader Kim Jong Un and aimed at verifying the capability to carry a “large scale heavy nuclear warhead''.
“It (North Korea's missile test) is underpinning support for gold but at the moment it has obviously not escalated to the point where investors are becoming overly worried about,” said ANZ analyst Daniel Hynes.
“It (North Korea-US relations) has been an issue for sometime. Throwing in Trump into the mix sends a bit of ambiguity into the market. So subsequently (investors are) a bit more cautious about the outcome than they have been in the past.”
US data on Friday showed a smaller-than-expected 0.4 per cent increase in April retail sales from the previous month, while a disappointing report on consumer prices raised concerns about the retail sector and the broader economy.
“The data seems to be pointing to a weakening trend (in the US economy). Based on what we have so far, unless there is more stronger data, more than two (US) rate hikes are not very likely,” Argonaut Securities analyst Helen Lau said.
Traders are expecting an almost 100 per cent probability of an interest rate increase in June, CME Group's FedWatch showed.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion, while boosting the dollar, in which it is priced.
Spot gold may end its current bounce in a narrow range of $1,229 to $1,236.60 per ounce, and then revisit its May 9 low of $1,214, according to Reuters technical analyst Wang Tao.
The dollar started the week on the defensive on Monday with the dollar index , which measures the greenback's value versus euro, yen and four other major currencies, easing about 0.1 per cent.
Hedge funds and other money managers cut their net-long position in COMEX gold to a six-week low in the week ended May 9, US Commodity Futures Trading Commission (CFTC) data showed.
Among other precious metals, silver was up 0.6 per cent at $16.55 per ounce. Platinum climbed 1.1 per cent to $927 per ounce and touched the highest since May 2 earlier in the session. Palladium rose 0.4 per cent to $809.30.
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