Gold prices edged lower on Thursday as the dollar firmed and investors booked profits, but losses were capped as dour retail sales and manufacturing data out of the United States heightened fears of a steep global recession due to the new coronavirus.

Spot gold slipped 0.1 percent to $1,714.74 per ounce by 0541 GMT. The metal had settled 0.7 percent lower on Wednesday, snapping four straight sessions of gains. US gold futures rose 0.3 percent to $1,744.50 per ounce. There is a lot of profit-taking, but the overall upward trend has not changed, said Avtar Sandu, senior commodities manager at Phillip Futures.

"If you look at the bigger picture, (economic) data is bad, which means you get another few more rounds of quantitative easing, and central banks would definitely keep interest rates low in this weak environment," he said.

US retail sales suffered a record drop in March

Gold
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US retail sales suffered a record drop in March and output at factories declined by the most since 1946, raising concerns that the economy contracted in the first quarter at its sharpest pace in decades as measures to control the spread of the virus weighed. Japanese business confidence plunged to fresh decade lows in April, while British retail spending slumped by more than a quarter during the first two weeks of lockdown measures.

Governments and central banks around the world have unleashed unprecedented fiscal and monetary stimulus and other support for economies floored by the pandemic. Lower interest rates reduce the opportunity cost of holding non-yielding bullion. Gold also tends to benefit from widespread stimulus from central banks, as it is often seen as a hedge against inflation and currency debasement.

Spot gold still targets a range of $1,675-$1,701 per ounce

"While gold will continue to be in demand, sometimes investors need funds to cover their margin calls, so losses in other financial assets might lead to falls in the gold price," said John Sharma, an economist at National Australia Bank. World stock markets fell, while bonds and the dollar held on to hefty gains, after a coronavirus-driven plunge in US retail sales and factory production and increasing gloomy economic outlooks for Asia.

Spot gold still targets a range of $1,675-$1,701 per ounce, following its failure to break a resistance at $1,744, Reuters technical analyst Wang Tao said. Palladium gained 0.9 percent to $2,199.96 an ounce, while silver slipped 0.9 percent to $15.33 per ounce and platinum fell 0.2 percent to $777.98 an ounce.