* Dollar ticks up on U.S. inflation data
* Chinese prices at discount
* GRAPHIC-2015 asset returns: http://link.reuters.com/dub25t
(Updates prices, adds comment)
By Jan Harvey
LONDON, Oct 16 (Reuters) - Gold eased on Friday as a
recovering dollar pulled prices from 3-1/2 month highs, but
doubts over whether the Federal Reserve will press ahead with a
U.S. rate rise this year kept the metal on track for a second
weekly rise.
Prices continued a retreat that began on Thursday after
upbeat U.S. inflation data calmed some concerns about the
strength of the U.S. economy and boosted the dollar. The U.S.
currency extended gains on Friday after industrial output data.
FRX/
Spot gold XAU= was down 0.1 percent at $1,181.66 an ounce
at 1400 GMT, while U.S. gold futures GCv1 for December
delivery were down $5.40 an ounce at $1,182.10. Spot gold is on
track to rise 2 percent this week after peaking at $1,190 an
ounce, its strongest since late June.
Gold is currently holding near its 200-day moving average, a
level it broke this week for the first time since May. However,
it has struggled to maintain the week's early gains, as some are
still betting on a rate hike later this year.
"There is still high uncertainty in the market about when
the Fed will raise rates," Commerzbank (DE:CBKG) analyst Daniel Briesemann
said. "Until we have seen the first interest rate hike, or at
least the announcement of it, gold should still be under
pressure."
Gold also lost some support from physical markets, where
consumer buying interest dropped due to the recent price rally.
Prices on the Shanghai Gold Exchange were at a discount on
Friday against a premium of $2-$3 earlier in the week.
Prices have risen more than 5 percent since a weak jobs
report on Oct. 2 pushed out expectations for a Fed rate rise.
The metal benefits from ultra-low rates, which cut the
opportunity cost of holding non-yielding assets.
Investor sentiment towards gold has improved. Holdings in
the world's largest gold-backed exchange-traded fund, SPDR Gold
shares GLD , rose another 5.1 tonnes on Thursday to 700 tonnes,
their highest since mid-July. GOL/ETF
That brought the fund's inflow for the week so far to 12.8
tonnes, the largest weekly rise since early February.
"We had slightly better U.S. data which saw the dollar
rally, so that seems to have scared off some of the gold buyers
for the moment," Societe Generale (PA:SOGN) analyst Robin Bhar said.
"But if it can consolidate around here and build a base,
that's a good platform," he said. "Some of the tailwinds are
back in gold, in the sense of softer U.S. data, (and) the fact
that a Fed rate hike is most unlikely this year."
Silver XAG= was flat at $16.09 an ounce, while platinum
XPT= was down 0.2 percent at $1,001.50 an ounce and palladium
XPD= down 1 percent at $694.75 an ounce.