Gold prices edged higher on Thursday as the dollar declined and after world shares slipped following renewed worries about China's economy.
The dollar index was down 0.3 percent, making gold more affordable to buyers using other currencies.
"Gold prices are having difficulty moving higher, but are also reluctant to move lower. They are looking for a new driver," said ABN AMRO commodity strategist Georgette Boele.
A trader said some investors switched to gold as world stock markets stumbled to three-week lows following September trade data from China, which revived concern about the world's second-biggest economy.
China's September exports dropped 10 percent from a year earlier, far more than markets had expected, while imports unexpectedly shrank 1.9 percent after an encouraging 1.5 percent rise in August.
"There is a lot of buying on the physical side in Asia, mainly from China and buying from exchange-traded funds after recent dips," said a precious metals trader with a bank based in China.
Gold has risen nearly a fifth this year but has struggled in recent months. It has shed 7 percent since early September, including a slide of over $40 on Oct. 4, its biggest one-day drop in 15 months, after strong U.S. economic data.
If bullish investors who are dominating the market at the moment started to sell it could create a snowball effect and U.S. retail sales data due on Friday could be a trigger, Boele added.
"There's a position risk with overall positions massively long, enormous, and people may ... give up on the idea that the price could go higher."
Boele downgraded her gold forecast on Wednesday to negative, saying in a note that the year's upwards trend was over and she forecast a year-end gold price of $1,200.
A drop of gold and silver prices below their 200-day moving averages was also a negative technical signal, she said.
Bullion prices initially dipped after strong U.S. jobless data boosted the likelihood of an interest rate rise before the end of the year, but they later clawed higher again.
Data showed the number of Americans filing for unemployment benefits held at a 43-year low last week, pointing to sustained labour market strength that could pave the way for the Federal Reserve to hike rates in December.
Since gold pays no interest, the precious metal is highly sensitive to increases in U.S. interest rates, which would also typically strengthen the dollar in which gold is priced.
Among other precious metals, silver
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