Gold rose on Wednesday after soft retail sales pointed to some loss of momentum in the U.S. economy, reducing fears among bullion investors that the Federal Reserve may raise interest rates sooner than expected.
The metal remained in a narrow range as signs that tensions in Ukraine and Iraq may be easing helped stock markets in Europe and the United States.
The Commerce Department said retail sales were virtually unchanged in July, in part because of a second straight month of declines in receipts at auto dealers. July's reading was the weakest since January.
Analysts said that the yellow metal is likely to remain rangebound in the near term barring a dramatic change in the global economic outlook and geopolitical tensions.
"We saw a move upwards after the retail sales data, which is now correcting," Commerzbank analyst Daniel Briesemann said. "We don't see any data coming up, or any other news, which is really going to shake gold out of its trading band."
Spot gold was up 0.3 percent at $1,312.60 an ounce by 2:35 p.m. New York time. U.S. Comex gold futures for December delivery settled up $3.90 at $1,314.50, with trading volume about 40 percent below the 30-day average. The metal has firmly held, however, within this month's $45 trading range.
Positive U.S. economic data, including second-quarter economic growth and wage increases, has sparked speculation that the Fed could raise interest rates sooner than expected, which could dampen gold's appeal as a hedge.
Gold exchange-traded funds reported inflows on Tuesday, Reuters data showed, suggesting some investor appetite for the metal. Demand in major consumer China remained muted. A lack of robust physical demand could make it hard to sustain rallies and may also mean there is little support if prices drop.
As a reflection of weak Asian bullion consumption, gold stocks held at U.S. exchange warehouses have shot to their highest since March 2013, keeping a lid on prices.
In precious metals benchmarking news, the U.S. Mint said on Wednesday it will adopt the new "London Silver Price" benchmark for its coin sales, silver purchases and price management programs following the end of the 117-year-old "silver fixing" mechanism.
Among other precious metals, silver was down 0.2 percent at $19.81 an ounce. Platinum eased 0.1 percent to $1,460.80 an ounce, while palladium gained 0.5 percent to $877.20 an ounce.
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