(Reuters) - Gold rose on Friday enroute to a second weekly gain as the dollar was subdued by weak U.S. economic data and hopes of a breakthrough in the U.S.-China trade dispute, with a darkening global economic outlook bolstering bullion.
Spot gold was up 0.3 percent at $1,327.40 per ounce by 2014 GMT, or about 0.5 percent higher so far this week.
U.S. gold futures settled down 0.4 percent at $1,332.80 per ounce.
The metal had fallen about 1 percent on Thursday following the release of minutes from the U.S. Federal Reserve's last policy meeting, which painted a less dovish picture than expected.
"Gold should be doing a little better, because there are possibilities of a trade deal, which would mean the dollar could weaken; the U.S. economy is also slowing quite markedly, that should keep interest rates fairly dormant," INTL FCStone analyst Edward Meir said.
Higher rates reduce investor interest in non-yielding bullion.
The dollar index was little changed versus six other major currencies on Friday, but was set for its biggest weekly fall in a month, bolstering the appeal of gold.
The U.S. currency, which has been a refuge for investors during the U.S.-China trade dispute, has come under pressure on signs of a breakthrough in talks. [USD/]
Also helping the case for gold, new orders for U.S.-made capital goods unexpectedly fell in December, reviving hope that the Fed would halt its 2019 rate-increase cycle.
The news added to concerns about a slowdown in Europe and China, which analysts said have prompted increasing interest in gold, considered a safe haven in times of economic and political uncertainty.
However, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, dropped 0.6 percent to 789.51 tonnes on Thursday.
Natixis analyst Bernard Dahdah 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 1.6 percent to $1,492.50 per ounce.
The autocatalyst metal was on track for a third straight week of gains, up about 4.3 percent.
Platinum rose 2.5 percent to $839.50, and was set for its best week since early November 2018. Silver was up 0.6 percent to $15.91, and poised to snap two weekly losses.
(GRAPHIC-Spot gold and ETF holdings, click here https://tmsnrt.rs/2BOiInZ)
(Reporting by Arijit Bose and Harshith Aranya; Editing by Richard Chang)