* Dollar falls against basket of currencies
* China September trade data worse than expected
* Palladium, platinum at multi-month lows
(Updates prices; adds comment, second byline, NEW YORK
By Marcy Nicholson and Eric Onstad
NEW YORK/LONDON, Oct 13 Gold prices edged higher
on Thursday as the dollar declined and 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.
Spot gold rose 0.3 percent at $1,258.55 an ounce by
3:17 p.m. EDT (1917 GMT), while U.S. gold futures
settled up 0.3 percent at $1,257.60.
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
"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
Bullion prices initially dipped after strong U.S. jobless
data boosted the likelihood of an interest rate rise before the
end of the year, potentially paving the way for the Fed to hike
rates in December.
"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," said ABN's Boele, pointing to U.S.
retail sales data due on Friday as a potential trigger.
Philadelphia Federal Reserve President Patrick Harker, who
does not have a vote on monetary policy this year but will in
2017, said the Fed should raise rates once by the end of this
year and at least twice in 2017, given that the U.S. economy is
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.
"Gold is on a road to nowhere. While we still think there is
small amount of upside for gold through year-end ... we remain
generally bearish into 2017," said RBC Capital Markets in a
note, reiterating its fourth-quarter forecast of $1,278.
"Whether or not the Fed raises rates in 2016, we think that
the market will continue to price in a healthy probability for
Among other precious metals, silver rose 0.4 percent
at $17.52 an ounce, while platinum fell 0.7 percent at
$935.45, after falling to a 7-1/2-month low at $925.65.
Palladium slipped 1.5 percent at $639.30 after
touching $633.98, its weakest since July 18.
(Additional reporting by Swati Verma and Nallur Sethuraman in
Bengaluru; editing by Alexandra Hudson and Tom Brown)