By Marcy Nicholson and Clara Denina
NEW YORK/LONDON (Reuters) - Gold rose 1 percent above $1,200 an ounce on Wednesday, as the dollar turned weak late in the session after weaker than expected U.S. economic data, while stronger U.S. and European stocks limited the metal's upside.
Spot gold >, lower initially, rose as much as 1 percent to a session high at $1,204.60. It was up 0.8 percent at $1,203.10 an ounce by 2:42 p.m. EDT (1842 GMT), extending gains above the 50-day moving average around $1,198.
U.S. gold for June delivery
"The late-day rise seems to be from the pull-back in the dollar index," said Howard Wen, precious metals analyst for HSBC Securities in New York.
The dollar <.DXY> cut initial gains and eventually turned lower against a basket of currencies, after data showed U.S. industrial output fell 0.6 percent in March.
"The dollar's retreat is mainly due to the weak U.S. economic data ...as long as we have weak economic figures out of the U.S., it is less likely that the Fed will start raising interest rates sooner rather than later," Commerzbank analyst Daniel Briesemann said.
The U.S. currency also lost ground against the euro > after the European Central Bank (ECB) said it expects euro zone economic recovery to broaden and strengthen and ruled out a cut to the deposit rate.
Gold's rebound on Wednesday was however capped by stronger European shares, hitting a 14-year high, while U.S. stocks rallied. [MKTS/GLOB]
"Gold is having to really compete with other financial assets that offer yields," Societe Generale analyst Robin Bhar said.
"There is still a lot of work for gold to do on the upside, there are too many headwinds at the moment and I don't think that is going to change quickly."
Data showing China's economy grew 7 percent in the first quarter, the slowest in six years, suggested that physical demand from the world's No. 2 consumer would remain tepid this year.
Premiums for physical gold on the Shanghai Gold Exchange picked up to $3-$4 an ounce over spot from just above a dollar earlier this week, although analysts say a slowing economy could cap Chinese demand.
Spot silver > rose 1.5 percent at $16.35 an ounce. Platinum > gained 0.7 percent to $1,159 an ounce and palladium > was up 1.1 percent at $768.50 an ounce.
(Additional reporting by Manolo Serapio Jr in Singapore; Editing by Susan Thomas and William Hardy)
