London: Gold edged lower on Friday as shares rebounded, but it was still set for a second straight weekly gain as concerns over the global economy have raised speculation the US Federal Reserve could keep interest rates low for longer.

Spot gold was down 0.1 per cent at $1,237.40 an ounce by 1145 GMT. The metal is up about 1.4 per cent for the week after reaching a one-month high of $1,249.30 on Wednesday.

US gold futures were down $3.50 an ounce at $1,237.70.

“There has been a move down in the dollar and equities this week, but in comparison the upside in gold has been relatively modest,” ABN Amro analyst Georgette Boele said.

“People are still cautious on gold. They buy it when there is some risk aversion, but in the end when wider sentiment improves you see the metal struggle.” European stocks clawed back some of this week’s losses on Friday after solid US data on Thursday calmed turbulence in global financial markets, though underlying worries about slowing world growth kept investors on edge.

The dollar was down 0.2 per cent versus a basket of currencies and was on course for its biggest two-week loss since September 2013 after Fed officials warned at the weekend that if the global recovery stumbled, the bank could delay an increase in US interest rates.

Bets had been rising that the Federal Reserve would raise rates in mid-2015.

The market will focus on a speech by Fed chair Janet Yellen due later on Friday.

Gold has benefited from the low interest rates and increased central banks’ liquidity that have prevailed in the years after the 2008 financial crisis.

On Thursday, the head of the St. Louis Federal Reserve Bank, James Bullard, said the central bank may want to keep up its bond-buying stimulus for now, given a drop in inflation expectations.

As a gauge of investor interest, SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, said its holdings rose 0.2 per cent to 760.94 tonnes on Thursday.

In top buyer China, premiums recovered slightly to $2-$3 an ounce from $1-$2 overnight, indicating higher demand and supporting global prices.

PLATINUM, PALLADIUM REBOUND Among other precious metals, platinum and palladium rebounded from heavy losses on Thursday.

Both metals have slid due to concerns about global growth and weak equity markets, HSBC said in a note. But the lower prices could also lead physical buyers to look for bargains.

“Although we saw no evidence of industrial or end-user buying on Thursday’s price drop, we anticipate that physical buying will materialize should the market decline further,” it said.

Platinum was up 1.2 per cent at $1,252.30 an ounce. On Thursday, it fell below the price of gold for the first time since April 2013 before paring some losses to close down 1.3 per cent.

Palladium rose 2.3 per cent to $751.75 an ounce, after falling as much as 5 per cent to its lowest since Feb. 27 in the previous session.

Spot silver was down 0.1 per cent at $17.30 an ounce.