NEW YORK: Gold rose about 1.5 percent on F riday, lifted by sharp rallies in equities and commodities after data showed that China's economic growth, though slower, was stronger than expected.
The precious metal was on track to post a weekly gain following Friday's rally.
China, considered an engine of the global economy, said its year-on-year growth was 7.6 percent in the second quarter, below the 8 percent level that in previous downturns has triggered a robust response from policymakers.
Its growth rate slowed for a sixth successive quarter to its weakest pace in more than three years, but economists had anticipated much worse because of signs of a slowdown in the United States and Europe.
Bullion, which has been particularly sensitive to central-banks' monetary policies, also received a boost from perceptions that the Chinese GDP data could open the door for further easing.
"It does indicate that the People's Bank of China has to promote more liquidity via further rate cuts or potential fiscal programs that make sure growth does not fall below these levels," said Mark Luschini, chief investment strategist at broker-dealer Janney Montgomery Scott, which has $54 billion in assets.
Spot gold was up 1.4 percent at $1,592.76 an ounce by 1:43 p.m. EDT (1743 GMT)
US gold futures for August delivery were up $27.40 an ounce at $1,592.70. The pace of trading was slightly slower than usual.
A 1.5 percent rally on Wall Street and sharp gains in crude oil and grains amid a weaker dollar also lifted gold, which has largely moved in tandem with the perceived riskier assets this year.
Gold held gains after data showed US consumer sentiment fell in early July to its lowest level in seven months, while producer prices rose only slightly last month, suggesting inflation pressures remain muted and leaving the door open for more easing by the US Federal Reserve.
INDIAN BUYERS RETREAT
On the physical markets, gold traders in major consumer India took to the sidelines on Friday as prices recovered, with a weak rupee making the metal more expensive for local buyers. Record local prices have weighed heavily on demand this year.
Holdings of gold-backed exchange-traded funds, which issue securities backed by physical stocks of the metal, dropped for a third session on Thursday.
The largest gold-backed ETF, SPDR Gold Trust, has seen an outflow of nearly 10 tonnes so far in July.
Among other precious metals, silver was up 0.9 percent at $27.39 an ounce, platinum was up 1.3 percent at $1,427.94 an ounce, and spot palladium was up 1.6 percent at $582.56 an ounce.
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