Gold touched a one-month high on Wednesday after soft U.S. data knocked the dollar lower against a basket of currencies and weighed on stock markets, boosting the metal's appeal as an alternative asset.
A recovery in the dollar had prevented gold from gaining traction after it rebounded last week from its lowest since mid-2013. The dollar's slide on Wednesday helped gold push back to a peak of $1,249.30 an ounce, its highest since Sept. 11.
Spot gold was up 0.7 percent at $1,241 an ounce, while U.S. gold futures for December delivery settled up $10.50 an ounce at $1,244.80 in unusually heavy trading volume, preliminary Reuters data showed.
"It's really economic news and the dollar that predominate for gold," Sharps Pixley Chief Executive Ross Norman said. "We're seeing a fade on economic growth across the board, particularly in Europe ... There are some serious concerns creeping in about disinflation."
The dollar hit session lows against the yen, euro and Swiss franc after data for September showed U.S. retail sales eased and U.S. producer prices fell for the first time in over a year, a potentially worrisome sign for the economy.
European shares also extended losses after the data, with the index hitting its lowest since early February. Wall Street stocks opened lower.
Gold has struggled for direction at a time of rising concerns over the health of the global economy, which has hurt stock markets. Economic data from Europe has remained weak and a worse-than-expected inflation reading from China has added to the gloom.
"Gold is at the mercy of other markets," Macquarie analyst Matthew Turner said. "There are two views here: that the current slowdown is temporary, or that this is another big downturn and that the central banks are powerless to stop it."
He added, "As the markets swing between those two views, you can get big moves in every market. It would be a brave person to say that gold can consolidate."
Among other precious metals, silver was down 2 percent at $17.08 an ounce.