Gold rises after weekly drop as equities, dollar retreat

Gold prices rose on Monday as stock markets eased after soft Chinese data, boosting interest in the metal as an alternative asset, and as the dollar weakened against the euro.

Gold edged back above $1,280 an ounce after posting its biggest weekly loss since mid-March last week, with some investors disappointed by its inability to sustain a push to 15-month highs above $1,300 an ounce earlier this month.

Stock market losses and a retreat in the dollar, in which gold is priced, helped tempt back some buyers on Monday.

Spot gold was up 0.6% at $1,281.11 an ounce at 0940 GMT, while US gold futures for June delivery were up $10.20 an ounce at $1,282.90.

The metal ended last week down 1.2% after a sharp midweek slide, though it rebounded 0.8% on Friday.

"Gold had a better close (last week) than one would have thought a few days earlier, and it seems to be putting in quite an impressive spell," Societe Generale analyst Robin Bhar said. "The trigger may be the softer China data we've had, with some misses on industrial production, retail sales. That's supporting the gold price this morning."

"I thought it might break down once we started testing below $1,270, but it didn't," he added. "That may have wrong-footed some of the people who went short."

European shares fell in subdued trade on Monday. Data from China over the weekend was less rosy, with April's retail sales, factory output and fixed-asset investment all falling short of forecasts by economists polled by Reuters.

The dollar eased 0.1% against the euro.

Gold has risen 20% this year after weak economic data in the United States and elsewhere tempered expectations of a near-term increase in US interest rates, which would lift the opportunity cost of holding non-yielding gold.

Among other precious metals, silver was up 1.1% at $17.28 an ounce. Platinum was up 0.3% at $1,053.11 an ounce, while palladium was up 0.9% at $594 an ounce.

As industry participants gathered in London on Monday for Platinum Week, the World Platinum Investment Council said in a report a drop in South African mine supply is set to deepen the deficit in the platinum market this year.

Metals Focus said in a report that platinum's slide to seven-year lows in January marked the end of the 18-month bear cycle that saw it nearly halve in value, as it forecast a shortfall in supply this year.