Gold was steady on Friday but still on track for a second weekly gain as sluggish U.S. economic data stoked worries about a global slowdown and investors awaited signals on U.S.-China trade talks.
Spot gold was up 0.53 percent at $1,330.38 per ounce by 1:57 p.m. ET.
U.S. gold futures were settled $5 higher at $1,332.80 per ounce.
"The market is expecting the dollar to weaken. We expect growth in the U.S. to slow," said Natixis analyst Bernard Dahdah.
The dollar index fell 0.16 percent versus six major currencies on Friday and set for its biggest weekly fall in a month. The U.S. currency, which has been a refuge for investors during the U.S.-China trade spat, has come under pressure on signs of a breakthrough in talks.
Minutes of the U.S. Federal Reserve's last meeting painted a less dovish picture than expected on future interest rates hikes, weighing on gold in the last two sessions. Higher rates reduce investor interest in non-yielding bullion.
But data showing new orders for key U.S.-made capital goods unexpectedly fell in December, revived some market expectations that the central bank would halt the 2019 rate hike cycle.
It added to jitters about a slowdown in Europe and China, which analysts said bolstered the appeal of gold, considered a safe haven in times of uncertainty.
"The main target (for gold) is still the technically important area between $1,350 and $1,360 above which would be a one-year high," said Ronan Manly, a precious metals analyst at BullionStar Singapore.
Investor attention has turned to U.S. and Chinese trade talks, which have shown some positive signs.
But holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped 0.6 percent to 789.51 tonnes on Thursday.
Dahdah at Natixis said the slight pullback did not signal a shift by gold investors since the levels were still close to highs recorded at the start of 2019.
Elsewhere, palladium gained 1.74 percent to $1,494 per ounce, having topped the psychologically significant $1,500 level for the first time on Feb. 20.
The autocatalyst metal was on track for a third straight week of gains, up about 3.4 percent.