LONDON (Reuters) - Gold prices rose to their highest in two weeks on Thursday as the dollar and U.S. bond yields declined following weaker than expected economic data.
Spot gold hit $1,150.26 an ounce, its highest since Dec. 14., and was up 0.4 percent at $1,146.28 by 1451 GMT.
U.S. gold futures rose $6.00 to $1,146.90 an ounce.
"Gold is not out of the woods yet but yields are a bit lower and the dollar is weaker, especially against the yen and yen-gold has showed a phenomenal correlation since the U.S. election," SaxoBank head of commodity research Ole Hansen said.
Gold fell more than 8 percent in November as U.S. Treasury yields rose after Donald Trump's election led to speculation his commitment to infrastructure spending would spur growth.
The precious metal then hit a 10-month low on Dec. 15 as solid U.S. economic data gave the U.S. Federal Reserve the confidence to raise interest rates for the first time in a year.
The central bank also signalled that it expected three more increases next year, up from a previous projection of two.
Gold is highly sensitive to rising interest rates, which lift the opportunity cost of holding non-yielding assets, while boosting the dollar, in which it is priced.
However, gold prices are still 8 percent higher than they were at the start of the year and were heading for the first annual increase after three years of declines.
"We are battling a bit here with the $1,150 level and if we make it above that we shall open up towards $1,165 but in order for funds to start getting worried about covering shorts, we probably need to rise above the mid $1,170s," SaxoBank's Hansen said.
The dollar fell 0.4 percent against a basket of six main currencies, mostly due to the yen's strength, while the benchmark 10-year U.S. Treasury yield slipped to two-week lows. [MKTS/GLOB]
"Heading into next week ... the Italian bank rescue and the direction of the Chinese yuan will likely dictate near-term pricing in gold, especially if equity markets start to get nervous about either of these two developments," INTL FCStone analyst Edward Meir said in a note.
Gold is usually seen as a refuge from riskier assets such as equities.
China's net gold imports in November via its main conduit Hong Kong dropped 17.8 percent from October to the lowest in 10 months, data showed on Thursday.
Among other precious metals, silver was unchanged at $16.01 an ounce. Platinum was 0.1 percent lower at $899.60, while palladium climbed 0.9 percent to $672.25 an ounce.
Additional reporting by Swati Verma in Bengaluru; editing by David Clarke and Adrian Croft