* Factory data fuels worries over China
* Dollar at 2-month low against currency basket
* GRAPHIC-Asset returns in 2015 - http://link.reuters.com/dub25t
(Adds NEW YORK dateline, byline; updates prices, adds comments)
By Marcy Nicholson and Jan Harvey
NEW YORK/LONDON, Aug 21 (Reuters) - Gold rose in choppy
dealings on Friday, hitting a six-week high and putting it on
track for its biggest weekly climb since mid-January as more bad
economic data from China rattled financial markets, pushing the
U.S. dollar broadly lower.
World stocks tumbled towards their worst week of the year,
while the dollar index .DXY hit its lowest in two months after
Chinese factory data added to doubts that the U.S. Federal
Reserve will raise interest rates next month. MKTS/GLOB
The Chinese data spooked investors already worried about the
slow pace of global growth, sending investors scurrying to the
safety of bonds and gold, while precious metals that have
industrial uses, such as silver and palladium, dropped after two
days of gains.
Gold had already rebounded this week from July's 5-1/2 year
low, boosted by minutes of the Fed's last policy meeting, which
dented expectations for an imminent rise in U.S. rates.
Spot gold XAU= hit a peak of $1,168.40 an ounce and was up
0.5 percent at $1,158.31 at 2:39 p.m. EDT (1839 GMT), up 4
percent on the week. U.S. gold futures GCv1 for December
delivery settled up 0.6 percent at $1,159.60.
"The Chinese economic data release today has ... helped the
metal, as this presages more headwinds for the Fed," said Naeem
Aslam, chief market analyst at AvaTrade.
"However, now we do need a new catalyst to drive the price
any higher and next week's economic data could certainly fulfill
this craving," he said.
The white metals extended losses when gold briefly moved
into negative territory. They are "suffering from the base
metals hangover, lack of industrial demand syndrome," said
Miguel Perez-Santalla, vice president of Heraeus Metal
Management in New York.
"The early market pull-back was attributed to gold hitting
the downtrend line, basically technical retracement," said Eli
Tesfaye, senior market strategist for brokerage RJO Futures in
Chicago.
Gold has come under heavy pressure this year from
expectations that the Fed would raise rates for the first time
in nearly a decade, lifting the opportunity cost of holding
non-yielding bullion while boosting the dollar.
The world's largest gold-backed exchange-traded fund, New
York's SPDR Gold Shares GLD , reported an inflow of 3.6 tonnes
on Thursday, its first rise in more than a week. GOL/ETF
Silver XAG= was down 1.7 percent at $15.29 an ounce,
platinum XPT= was down by 0.8 percent at $1,020.75 and
palladium XPD= was down 2.7 percent at $601.25.