Gold retraces from 2-week peak as investors lock in profits

Gold prices pulled back from a two-week high to trade lower on Thursday, as some investors took advantage of the last session's gain to book profits.

Spot gold was down 0.3 percent at $1,422.40 per ounce, as of 0546 GMT, after hitting its highest since July 3 at $1,428.40.

It rose nearly 1.5 percent in the previous session as the dollar slipped after weaker-than-expected U.S. housing data increased prospects for an interest rate cut by the Federal Reserve.

U.S. gold futures edged 0.1 percent lower to $1,421.90 an ounce.

"A slightly weaker dollar and a clear preference from investors over the last 24 hours drove safe-haven assets higher," said Michael McCarthy, chief market strategist, CMC Markets.

"From gold's point of view, it approached a key resistance level around $1,430, and having failed to push through it, it looks like short-term trading investors are taking advantage of gains."

The dollar index was down 0.2 percent against a basket of major currencies on Thursday. It climbed to a one-week peak in the previous session on robust U.S. retail sales, but nudged lower as Treasury yields fell in the wake of weak U.S. housing market data and concerns about the unresolved U.S.-China trade conflict.

Meanwhile, the Fed is widely expected to lower interest rates by 25 basis points at its policy meeting at the end of the month, with some in the market even betting on a 50 basis point cut.

The Fed reported on Wednesday that the U.S. economy continued growing at a "modest" rate in recent weeks, with consumers continuing to spend and a "generally positive" outlook overall even in the face of disruptions caused by the U.S. trade policy.

Earlier in the week, U.S. President Donald Trump kept up the pressure on Beijing with a threat to put tariffs on another $325 billion of Chinese goods.

"Bullion is likely to see strong support after the Fed's Beige Book emphasised policymakers' concern on negative impact of trade uncertainty," Edward Moya, a senior market analyst at OANDA, said in a note.

Indicative of sentiment, holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.48 percent to 803.18 tonnes on Wednesday from 799.37 tonnes on Tuesday.

Among other precious metals, silver was up 0.5 percent at $16.05 per ounce, after hitting its highest since Feb. 20 at $16.12. The metal was also on track for a fifth consecutive session of gains.

Platinum rose 0.8 percent to $849.88 an ounce and palladium gained 0.3 percent to $1,542.49.