Gold prices slipped on Friday, after a rally following positive economic data from China faltered on dour U.S. consumer data.

U.S. gold futures ended the U.S. session at $1,687, down $3.80 as stocks gave up some of its early gains. U.S figures showed consumer sentiment at its lowest level in over a year in January.

Platinum and palladium declined as players exited positions following recent gains.

Spot gold was above $1,686 an ounce, heading for a weekly rise of 1.4 percent, its biggest in nearly two months. It hit a one-month high of $1,695.56 on Thursday.

The metal was also lifted by renewed physical demand in China ahead of the New Year in February and after better-than-expected Chinese GDP data.

China's economy grew at a slightly faster-than-expected 7.9 percent in the fourth quarter of 2012, which combined with Thursday's positive U.S. data, sent world stocks to hit 20-month highs earlier.

"For gold we had some good physical demand from Asia, particularly China, after better-than-expected GDP data," HSBC analyst Howard Wen said. "We expect physical buying to pick up ahead of the Chinese New Year on Feb. 10."

Positive physical demand was also seen elsewhere, with the swap rate for delivery in Zurich versus London firmly in positive territory, suggesting strong physical offtake and subdued scrap supply, broker UBS said in a note.

Prices were hovering just below their 50-day moving average at $1,696, which represents a technical resistance level along with the psychological mark of $1,700, according to analysts who study past price patterns to determine the future direction of trade.

"There is some technical resistance at that $1,700 level, and gold has to break above that to move higher," HSBC's Wen said.

In the longer term, expectations that the U.S. Federal Reserve would continue its monetary stimulus and concerns about U.S. fiscal conditions will keep gold attractive as a hedge against inflation and uncertainty, market participants said.

PGMs Retreat

Platinum and palladium were down following their rally to multi-month highs earlier this week.Spot platinum fell 1.5 percent trade below $1,665 an ounce but was still on course to rise for a third week, by 2.3 percent.

Spot palladium fell more than a percent to trade just below $714 an ounce, having earlier hit a 16-month high of $730.47.

Platinum group metals were underpinned by threats to South African supply and by the positive Chinese GDP data, which supported expectations that demand from carmakers, the biggest consumers of the platinum group metals, will improve.

Platinum hit a three-month high at $1,701.50 on Thursday after rising throughout the week on supply concerns from leading producer South Africa, where number one platinum miner Anglo American Platinum announced cutbacks.

"The market seems to have discounted the impact of the Amplats' announcement," MKS Finance Vice president Bernard Sin said.

Trading in the two metals was also affected by high levels in Comex long positions.

"Comex positions for PGMs are at record levels, and it's a question of how much longer they can go, and that's one of the main reasons why the metals are down today," HSBC's Wen said.

Spot silver rose to a one-month high of $32.11, on course for a 4.5 percent weekly gain. It was last seen at $31.76, up 0.1 percent.

The U.S. Mint suspended sales of its 2013 American Eagle silver bullion coins after running out of stock due to soaring investor demand for the newly minted coins in the first two weeks of the year until the week of Jan. 28.

Platinum jumped to a three-month high on Thursday, passing the price of gold for the second session in a row after upbeat U.S. economic data boosted optimism about demand for industrial commodities such as platinum, a vital material for automakers.

Palladium also rallied, hitting 16-month highs, as investors in platinum group metals (PGMs) remained wary about supply shortages after miner Amplats announced this week an overhaul that could cut 400,000 ounces of platinum production in a year.

Spot gold was up about 0.6 percent above $1,689 an ounce, while U.S. gold futures for February delivery settled up by $7.60 an ounce at $1,690.80.

"There is a significant chance of platinum moving back to a normal type of premium of at least $100 (against gold)," INTL Commodities CEO Jeff Rhodes said.

"Potential for further supply shocks in the PGMs does have all the ingredients for an interesting few weeks in terms of prices," Rhodes added.

The rally came as upbeat U.S. housing and jobs data sparked a rise in U.S. stocks to five-year highs and cut early losses in the dollar, boosting appetite for risk assets, particularly industrial commodities such as PGMs. The Thomson Reuters-Jefferies CRB index, which tracks 19 commodities, hit a 2-week high.

Platinum and palladium are integral for reducing toxic emissions from cars.

Analysts say explosive growth in China's automobile industry, and a November report from PGM specialist and refiner Johnson Matthey forecasting the biggest palladium deficit in 12 years, had combined to create the unusual price action.

Some caution that the rally, driven largely by buying from hedge funds and money managers, might have gone too far.

Thursday's run-up came in spite of news that miners at Amplats, or Anglo American Platinum, had returned to work after an illegal walkout to protest against the world's top platinum producer's plan to cut 14,000 jobs, close two mines and sell another.

Since the year began, platinum, which is also popular in jewelry making, has already risen about 10 percent in price and palladium about 8 percent. Thomson Reuters data shows the Relative Strength Index for both metals at above 60, technically putting them in overbought territory.

The U.S. EFTS Platinum Trust has also posted an increase in its platinum holdings so far in January. Many still think prices will push higher.

"The two markets are up nicely, but it's not like the move has been parabolic. We do think PGMs have more to go," said Mark Luschini, chief investment strategist of Janney Montgomery Scott, a broker-dealer which manages $54 billion in assets.

Gold moved back above its 200-day moving average this week, a key chart level, after falling below that level in early January when minutes of a Federal Reserve policy meeting showed concern about the scope of U.S. monetary easing.

(Read More: Gold Can Still break Through $2,000: Analysts)

"We are still in a period of trial, trying to rebuild the confidence into the gold market," Saxo Bank vice president Ole Hansen said. "We have not breached any critical levels yet to the upside, which could signal that further strength could be coming."

Hansen added: "While we still stay above the 200-day moving average around $1,662, there is a lot of nervousness in the market. We've seen big swings at the start of January, we spent the last week trying to recover from that."

Dealers said physical buying interest for gold has ebbed, after a robust start to the year.

"What we did see in the gold dips was strong physical demand across the Asian world, including Thailand and India, but since (then), the physical market has definitely slowed," INTL's Rhodes said.

Supply concerns from major producer South Africa also continued to drive prices higher, after miner announced an overhaul that it said could cost it 400,000 ounces of platinum production a year.

Spot platinum advanced by nearly one percent to trade below $1,698, closing in on a three-month high of $1,699.50 hit on Tuesday. Spot palladium was up about 0.7 percent below $726 an ounce, setting a new 16 month high.

Silver gained nearly one percent, trading above $31.

Platinum rose for a seventh consecutive session on Wednesday, driven by strong hedge fund buying after a mine labor crisis at the world's largest platinum producer in South Africa stirred fears of a supply shortage.

The price of platinum also stayed above that of gold for a second straight day when Anglo American Platinum in South Africa said it would shut two mines and cut 14,000 jobs.

The move is expected to widen the platinum market's deficit in 2013 in an already tight market due to strong autocatalyst demand.

Buying by momentum-driven hedge funds and money managers has fueled platinum's 9-percent rally in the past seven sessions, sending the market deeper into an overbought territory. The U.S. EFTS Platinum Trust also posted an increase in its platinum holdings so far in January.

Tim Murray, general manager of precious metals marketing at Johnson Matthey USA, said the funds still see platinum fairly cheap given what's going on in South Africa.

"I will not be surprised to see a sell-off and then a rebound again. It's going to be very volatile,'' Murray said.

Spot platinum rose 0.4 percent to about $1,685 an ounce, hovering near a three-month high of $1,699.50 set on Tuesday.

On technical charts, spot platinum's relative strength index (RSI) shot to 77 from 67 last Friday, above 70 in an area traditionally considered by analysts as overbought.

Dealers and analysts said prices were likely to stay firm, underpinned by labor strikes at three of Amplats' South African mines. The world's top producer on Tuesday announced plans to mothball shafts and cut jobs that would reduce output by around 400,000 ounces annually, or around 1 percent of total supply.

The platinum market largely ignored news that Amplats miners will end an illegal walkout from Wednesday night and want talks to prevent further action.

Spot palladium last rose 2 percent to $723 an ounce.

Short-Term Pressure for Gold

Spot gold was last up 0.2 percent to $1,682 an ounce, overshadowed by rallies in the platinum group metals. U.S. gold futures settled down 70 cents at $1,683.20 an ounce, with trading volume largely in line with its 250-day average.

(Read More: Gold Can Still Break Through $2,000: Analysts)

Gold and platinum hit parity for the first time since March on Tuesday.

Year to date, gold was up 0.3 percent, sharply underperforming platinum, which posted a 10 percent gain.

The yellow metal should find underlying support in coming months from dollar weakness, which should send prices to a record average high, consultancy Thomson Reuters GFMS said.

The gold market was little changed after news Germany's central bank plans to bring home hundreds of tonnes of gold currently held by the U.S. Federal Reserve in New York and the Bank of France in Paris.

Spot silver last rose 0.5 percent to about $31.

Platinum rose to a three-month high on Tuesday, rallying for a sixth straight session as funds bought heavily due to a mine labor crisis in South Africa that sparked supply fears.

Platinum received a strong boost after Anglo American Platinum plans to shut two South African mines and cut 14,000 jobs, risking a repeat of last year's violent strikes as the world's largest producer of the autocatalyst metal struggles to stem losses.

The move is expected to cut output by around 400,000 ounces annually, or around 1 percent of total supply in an extremely tight market due to strong demand by U.S. and Chinese automakers.

Platinum has rallied more than 8 percent in just the last six sessions, sending the metal into an overbought territory. The surge in platinum also propelled prices above that of gold for the first time in almost a year.

"Platinum is going to have continuous price appreciation because there are some very serious labor issues that are not going to let up at all,'' said Jeffrey Sica, chief investment officer at SICA Wealth Management.

Spot platinum was up 1.3 percent at $1,676.50 an ounce, having earlier touched $1,699.50, its strongest since Oct. 9. Year to date, the metal is up almost 10 percent.

U.S. April NYMEX platinum futures settled up $31.70 at $1,689.90 an ounce, with trading volume nearly doubled its 250-day average, preliminary Reuters data showed.

On technical charts, spot platinum's relative strength index (RSI) shot to 75, above 70 in an area traditionally considered by analysts as overbought.

Platinum miners have been under intense pressure, hit by a wave of strike action in the last year while contending with rising operating costs and stubbornly depressed prices.

"Anglo Platinum will not be the last company to cut output,'' S.P. Angel analyst John Meyer said. ``We would expect platinum miners to pull back by 25 to 30 percent, which is going to have a severe impact on prices.''

Platinum was trading at a premium to gold for the first time since March, after it traded at a historically unusual discount to the yellow metal for much of last year.

Gold Up on Platinum, Bernanke

Platinum's rise lifted other precious metals, with palladium hitting its highest since last March at $717.50. Spot palladium was last at $707, up 0.9 percent on the day.

Gold prices also found support from a looming battle in Washington over the government's borrowing limit, a day after Federal Reserve Chairman Ben Bernanke discussed the negative economic effects of any failure to agree to a higher ceiling.

(Read More: Gold May Be Down, but Bulls Aren't Counting It Out)

Spot gold was up 0.7 percent at $1,678.60 an ounce. U.S. gold futures settled up $14.50 at $1,683.90.

Silver rose 1 percent to $31.33 an ounce.

Gold edged up, but trailed platinum's rise, helped by gains in agricultural and energy prices.

Platinum prices received a boost on news that South Africa's Anglo American Platinum is likely to sell or shut its Union mine as part of a review of its platinum business by parent Anglo American.

Expectations that such action will further tighten the platinum market, which was expected to post a deficit this year, is pushing platinum back towards parity with gold for the first time since April last year.

"Platinum prices definitely have room to move higher," said Howard Wen, metals analyst at HSBC.

Wen cited strong performance of the U.S. platinum exchange-traded funds and an increase in bullish bets by hedge funds and money managers showed by CFTC data.

Spot platinum was up 1.6 percent at $1,655.50 an ounce, having earlier touched its highest since mid-October at $1,660 an ounce.

U.S. April NYMEX platinum futures settled up $27 at $1,658.20 an ounce, with trading volume about 30 percent above its 30-day average, preliminary Reuters data showed.

Platinum's discount to gold narrowed to around $10 from about $140 at the start of the year.

Analysts are expecting the review at Amplats, the world's top platinum producer, will lead to at least some shaft closures due to soaring costs and falling profits.

(Read More: Gold Must Hit This Level to Be a Buy: Futures Pro)

Recent encouraging U.S. auto sales data also boosted fund buying in platinum and palladium, which are mostly used in catalytic converters to clean exhaust fumes in vehicles.

Spot palladium rose 0.2 percent to $697.70.

Gold Edges Up

Spot gold was up 0.3 percent at $1,666.65 an ounce, while U.S. gold futures for February delivery settled up $8.80 an ounce at $1,669.40, with trading volume about 20 percent below its 30-day average.

Bullion investors remained wary towards gold after it recorded its biggest quarterly drop in more than four years in the last three months of 2012. (Read More: Despite Fall, Gold Still Has True Believers)

Financial markets were awaiting a speech later in the day by Federal Reserve Chairman Ben Bernanke. Attention will focus on any further indications of how long the U.S. central bank's latest bond buying program will last.

In the longer term, gold may derive support in coming months from discussions over the raising of the U.S. debt ceiling.

"We view the recent sell-off as a good entry point to re-establish fresh tactical longs in gold before the run up to the debt ceiling debate, which we view as a likely catalyst for higher gold prices," Goldman Sachs said in a note.

Goldman, however, said that it expects gold prices to decline as better U.S. economic data overrides further easing.

Silver gained 1.9 percent to $31.01 an ounce.

Gold fell 1 percent on Friday, finishing nearly flat for the week, after growing inflation pressure in China dented hopes for more stimulus from the world's second-largest economy.

The metal slid after data showed China's annual consumer inflation rate quickened to a seven-month high of 2.5 percent in December. Analysts said the inflation data is leaving the economy in a sweet spot now that calls for no change in interest rates.

"A pick-up in the Chinese inflation number has some people thinking maybe the long-anticipated Chinese stimulus may not (happen)", said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC.

(Read More: China Inflation Accelerates - Time to Remove the Punch Bowl?)

Bullion slipped below its 200-day moving average, failing to hold the previous session's 1 percent gain.

Spot gold was down 0.9 percent to $1,659.87 an ounce in afternoon trading.

For the week, it gained 0.2 percent gain, lifted by better Asian physical demand and rallies in the platinum group metals lifted gold.

U.S. gold futures for February delivery settled down $17.40 an ounce at $1,660.60, with volume about 10 percent above its 250-day average, preliminary Reuters data showed.

Gold is down 1 percent so far this year after posting its biggest quarterly decline in more than four years at the end of 2012. Gold's failure to rise on U.S. quantitative easing has shaken investor confidence in the precious metal.

John Hathaway, a respected portfolio manager for the Tocqueville Gold Fund, said extreme levels of negative sentiment have recently provided excellent entry points for new bullish positions in the yellow metal and gold mining shares.

A pick-up in physical gold buying in China ahead of the Lunar New Year and uncertainty related to the U.S. debt-ceiling crisis suggested gold prices will rebound in 2013, Barclays strategists said in a Friday note.

In Asia, Tokyo gold futures hit a record high as the yen dropped to a 2-1/2-year low after the Japanese government approved $117 billion of spending to revive the economy in the biggest stimulus since the financial crisis.

Silver was down 1.4 percent at $30.38 an ounce.

PGM Up for Week

Platinum group metals, used in autocatalysts, are both on track for gain this week, outperforming gold. PGMs are boosted by improved U.S. auto sales data and a better economic outlook.

Gold's premium over platinum, a historically unusual phenomenon that has persisted since the first quarter of 2012, fell to less than $40 an ounce on Friday, from around $140 at the end of 2012.

Spot platinum was up 0.1 percent to $1,625.01 an ounce. The white metal has risen more than 5 percent so far this year.

Platinum benefited in the second half of 2012 from a deadly wave of violence linked to industrial action in South Africa, source of four out of five ounces of the world's platinum.

Among other PGMs, spot palladium edged up 0.2 percent to $697.70 an ounce. It gained 1.7 percent for the week.

Gold rose over one percent to over $1,675 an ounce on Thursday, on track for its biggest one-day gain since late November as signs that the European Central Bank will not cut interest rates any time soon boosted bullion buying.

Platinum group metals (PGMs) also climbed two percent as encouraging export-growth data in China triggered broad gains in industrial commodities and equities. Recent improvement in U.S. vehicle sales also boosted demand for the PGMs largely consumed as auto catalytic converters.

Gold has now rebounded more than 3 percent after hitting a 4-1/2 month low under $1,625 an ounce last week, when minutes from the Federal Reserve's policy meeting in December showed several top officials favored slowing or stopping the stimulus program "well before" the end of the year.

ECB President Mario Draghi said the euro zone economy will remain weak in 2013 and he expects a gradual recovery only later in 2013, as the ECB held interest rates at a record low of 0.75 percent.

"Gold was oversold after the Fed minutes. I don't see the Fed will be doing anything to withdraw stimulus soon," said Bill O'Neill, partner of commodities investment firm LOGIC Advisors. "Clearly, Mario Draghi is leaving room for accommodation, and the overall global pattern of central bank easing continues to be there," he said.

Spot gold rose more than a percent to trade above $1,676 an ounce, having earlier hit a one-week high of $1,678.60 an ounce. U.S. COMEX gold futures for February delivery settled up $22.50 at$1,678 an ounce, with trading volume in line to finish around its 30-day average, preliminary Reuters data showed.

Central bank monetary stimulus was a key driver behind gold's 12th year of annual gains in 2012 as investors were drawn to bullion as a hedge against inflation.

An over one percent gain in the euro against the dollar and increases in grains and crude oil further boosted gold's gain. Also underpinning gold was data showing China's export growth rebounded surprisingly sharply to a seven-month high in December after seven straight quarters of slowdown.

Gold eased in light trading on Wednesday, giving back some of the previous session's gains, while platinum group metals rallied as improving U.S. auto sales and a better economic outlook triggered fund buying.

Bullion retreated after Tuesday's almost 1 percent gain, lifted by speculation the Bank of Japan will consider easing monetary policy again in January. Signs of better Asian physical demand from China and India, however, provide underlying support, traders said.

Market sentiment remains cautious after minutes from the December meeting of the Federal Open Market Committee showed several top officials favored slowing or stopping the stimulus program "well before'' the end of the year.

"The gold market now focuses on the ECB meeting tomorrow and the FOMC meeting at the end of the month. Other than those, gold has struggled to find a direction in a slow news week,'' said David Meger, director of metals trading at Vision Financial Markets.

The metal market will now closely monitor remarks from Thursday's meetings of both the Bank of England and the European Central Bank for any hint about the central banks' monetary policies. A string of U.S. economic data next week including retail sales, consumer prices and housing starts could offer new catalyst for the gold market, analysts said.

Spot gold was down 0.1 percent at about $1,656 an ounce. U.S. gold futures settled down $6.70 at $1,655.50, with trading volume at around 20 percent below its 30-day average, preliminary Reuters data showed.

Technical selling also weighed down on gold after the metal ran into resistance after it has failed to hold gains above its 200-day moving average at around $1,660 in recent sessions, analysts said.

In the physical market, gold buying tailed off in major consumer India after a strong start to the week as dealers awaited a further price correction, traders said.

Holdings of the world's largest gold-backed exchange-traded fund, New York's SPDR Gold Trust, eased for a second day and are down 11 tonnes from the start of the year.

Economic Optimism Boosts Palladium

Palladium rose 2.4 percent to $684 an ounce for its biggest one-day gain in around two weeks. However, palladium was still down 0.3 percent for week after it lost almost 3 percent on Monday.

Small gains in U.S. equities amid a brighter economic outlook and signs of continuous improvement in U.S. auto sales prompted funds to pour into palladium, Vision's Meger said.

Among other precious metals, silver was down 0.3 percent to $30.27 an ounce, while spot platinum gained 1.3 percent to $1,594.50 an ounce.

Gold's premium over platinum, a historically unusual phenomenon that has persisted since the first quarter of last year, fell to $60, its lowest at around since mid-September on Wednesday.

Asian Buying Picks Up

Gold-buying in Asia in particular rose after prices dropped to a 4-1/2 month low last week, with the trading volume on the Shanghai Gold Exchange's 99.99 gold physical contract hitting record levels on Monday.

The premium of Shanghai's 99.99 gold over spot prices was also increasing, traders said. The Hong Kong Census and Statistics Department said on Tuesday that Hong Kong exported 90.763 ton of gold to mainland China in November, up 91 percent on the month.

In addition, premiums on gold shipments to India jumped to their highest in two months on Tuesday.

Among other precious metals, silver was up 0.9 percent at $30.39 an ounce, while spot platinum rose 1.7 percent to $1,578.74 an ounce and spot palladium edged up 0.3 percent to $670 an ounce.

Gold dropped on Monday as uncertainty about the duration of the Federal Reserve's economic stimulus program decreased bullion's appeal as a hedge against inflation.

The metal remained under pressure after two top Fed officials on Friday suggested the U.S. central bank may halt its bullion-friendly asset purchases by the end of 2013 due to a better economic outlook.

"Any time there is any concern about Fed tightening, those nervous gold investors leave the market very quickly,'' said James Dailey, portfolio manager of TEAM Financial Asset Management.

However, signs of disappointing U.S. economic growth suggest the Fed will not change course any time soon, Dailey said. Gold, used by investors as a hedge against inflation brought about by central-bank stimulus, has been particularly sensitive to any indications that the Fed might end its purchases of Treasury securities and mortgage-backed securities.

Losses in U.S. stocks on speculation about weaker corporate earnings also dragged gold prices lower, analysts said.

Spot gold was down 0.6 percent at $1,647 an ounce. U.S. gold futures settled down $2.60 at $1,646.30, with trading volume 20 percent below its 30-day average, preliminary Reuters data showed. (Read More: Will Gold Shine in 2013?)

On Friday, bullion ended sharply off its 4-1/2 month low near $1,625 after a Labor Department report showed the U.S. jobless rate held steady at 7.8 percent in December.

The Fed is currently buying $40 billion in mortgage-backed securities and $45 billion in Treasurys each month in a bid to push down borrowing costs and spark faster growth. It has said the program will continue until it sees a sustained upturn in the jobs market.

Fed in Focus

Analysts said the price of gold could quickly rebound if data suggests the pace of the U.S. economic recovery is too slow to justify withdrawal of Fed stimulus. (Read More: Pro: Why Gold's Pain Could Continue)

"It's difficult to make assumptions ... whether the FOMC minutes represent a material change of monetary policy from the Fed, and we are well aware that an off-the-cuff remark by Fed Chairman Bernanke could reverse the markets in an instant,'' TD Bank strategists said in a note.

On Friday gold slid to its lowest level since late August after minutes from the December meeting of the Federal Open Market Committee showed several top officials favored slowing or stopping the stimulus program ``well before'' the end of the year.

Among other precious metals, silver was last down 0.4 percent to about $30 an ounce. Platinum last rose 0.2 percent to $1,555 an ounce, and palladium last dropped 2.3 percent to $667 an ounce.