Gold edges up on soft economic data

LONDON, Aug 14 (Reuters): Gold edged higher on Thursday as the dollar weakened and sluggish U.S. and European economic data prompted investors to switch positions from riskier assets such as equities to safer bets.
Spot gold rose 0.2 percent to $1,315.20 an ounce by 1003 GMT, while U.S. gold futures for December delivery were up $2.10 an ounce at $1,316.60.
"Geopolitics, weaker dollar and softer economic data are all supportive but prices are not able to break consistently out on the upside, with $1,316-$1,320 proving a very stiff barrier that we have tested a few times in the past month or so," Societe Generale analyst Robin Bhar said.
European stocks were mixed after data showing the German economy suffered a surprise contraction, its first in more than a year, in the second quarter, while France slashed its growth forecasts for this year and the next after its economy failed to grow in the three months to June.
In the United States, Tuesday's data showed retail sales unexpectedly stalled in July, pointing to a loss of momentum in the economy early in the third quarter.
This eased some investor fears that the Federal Reserve will raise interest rates sooner than expected, pushing the dollar lower and gold to daily highs in the previous session.
The dollar was down 0.1 percent against a basket of main currencies, under some pressure from lower 10-year U.S. Treasury yields.
Returns on bonds are closely watched by the gold market, given that the metal pays no interest.
Gold, which was heading for a second week of gains, also benefited from data showing growth contraction in Japan and a shock fall in Chinese loans, which helped to make any tightening in monetary policy by global central banks seem a very distant prospect.
Accommodative monetary policies favour gold as low interest rates encourage investors to put money into the non-interest-bearing assets.
A nine-percent increase in the price of gold this year so far has been helped by spells of international political escalations in Ukraine, Iraq, Isreal-Gaza. These have however been able to provide short-lived pushes higher.