Gold jumped to a two-week high on Friday after weak U.S. economic data boosted expectations the U.S. Federal Reserve would hold pat on monetary tightening, while palladium matched an all-time high on a prolonged deficit.
Spot gold was up 0.63 percent at $1,320.81 an ounce at 2:04 p.m. ET, having touched its highest since Feb. 1 at $1,319.81.
U.S. gold futures settled $8.20 higher at $1,322.10.
While gold is on track to notch a small weekly gain, it was rangebound for most of the week, with gains on Friday stemmed by a stronger dollar and a rebound in stocks.
"Gold (price action) is like watching oil evaporate. The market is continually bearish at lows and bullish at highs with actual breaks infrequent," said Tai Wong, head of base and precious metals derivatives trading at BMO.
"The end of the (Fed) tightening cycle now looms which improves the overall backdrop for gold significantly. With the Fed on hold, there is less pressure for the rest of the globe to keep pace."
The metal gained 0.5 percent in the previous session after weak U.S. retail sales data added to disquiet about slowing growth, which could allow the Fed to hold interest rates steady for a while.
The disappointing U.S. data followed a spate of weak economic reports from China and Europe.
This helped gold to hold its ground amid gains in the dollar , which stayed close to a two-month peak against a basket of currencies, and a rebound in global stocks on hopes of a thaw in the U.S.-China trade dispute.
"The world economy is slowing very rapidly and therefore monetary policy everywhere will be eased, so the outlook is a lot more inflationary, helping gold," said Alasdair Macleod, head of research at GoldMoney.com.
The world's two biggest economies reached a consensus in principle on some key issues during ongoing talks, China's state news agency Xinhua said on Friday. Negotiations will continue next week in Washington.
Meanwhile, palladium gained 1.17 percent to $1,432.
"Bullish commentary, including from Johnson Matthey, on widening deficits for 2019 this week saw palladium close clearly above $1,400 yesterday, which has driven more buying today," BMO's Wong said.
"The size of the deficit was bigger than expected."
Leading autocatalyst manufacturer Johnson Matthey on Wednesday said a deficit in the palladium market will widen dramatically this year.