Sept 16 (Reuters) - Gold prices rebounded early on Friday from a near two-week low in the previous session, after disappointing U.S. economic data reduced the chances of an interest rate hike next week, though the metal was still on track for its first weekly loss in three.
FUNDAMENTALS
* Spot gold XAU= was up 0.2 percent at $1,316.30 an ounce by 0052 GMT, but was on track to end the week down nearly 1 percent.
* U.S. gold futures GCcv1 rose 0.1 percent to $1,319.80 an ounce.
* U.S. retail sales fell more than expected in August amid weak purchases of automobiles and a range of other goods, pointing to cooling domestic demand. The economic growth outlook also took a hit from other data on Thursday showing a drop in manufacturing output last month. The reports, which extended August's run of weak data, prompted economists to cut their growth estimates for the third quarter.
* In a second report, the Fed said manufacturing output fell 0.4 percent in August, reversing July's increase.
* U.S. weekly jobless claims data showed on Thursday a tightening labor market with subdued layoffs last week, while underlying producer price inflation crept up in August. Chances the U.S. Federal Reserve will raise interest rates in December have shot up in the past month, according to a Reuters poll that showed economists are more convinced a move is on its way despite weak inflation and wage growth. Barrick Gold Corp ABX.TO said on Thursday that operations at its Veladero mine in Argentina were temporarily suspended by the government after a "small quantity" of processing solution that contains cyanide leaked outside a processing area. India's gold imports fell for a seventh straight month in August to $1.1 billion as sluggish demand and record high discounts prompted banks and refineries to reduce overseas purchases of bullion. Holdings of SPDR Gold Trust GLD , the world's largest gold-backed exchange-traded fund, fell 0.35 percent to 932.23 tonnes on Thursday.
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MARKET REPORT
* Asian stocks firmed on Thursday after weak U.S. data reduced the already low chance of an interest rate increase by the Federal Reserve at next week's meeting, sending the Treasury yield curve surging to its steepest level in 2-1/2 months. MKTS/GLOB
DATA/EVENT AHEAD (GMT)
0900 Euro zone Labour costs Q2
1230 U.S. Consumer prices August
1400 U.S. Univ of Michigan sentiment index September
1530 U.S. Cleveland Fed CPI August