By Sethuraman N R
REUTERS - Gold edged up on Friday as equities fell on worries over the stability of Deutsche Bank, but a firmer dollar capped gains.
Spot gold rose 0.3 percent to $1,323.70 an ounce by 0648 GMT. The yellow metal was however on track to end the week down nearly one percent. Gold has gained one percent so far in the month and is likely to end flat over the three-month period.
U.S. gold futures were mostly flat at $1,326.70 an ounce.
Deutsche Bank shares slumped to a record low after Bloomberg reported that trading clients had withdrawn excess cash and positions held in the largest German lender.
"Concerns over Deutsche Bank are helping to provide an underlying level of support for gold," MKS PAMP Group trader Sam Laughlin said.
"However, we see the metal moving closer to the 100-day moving average around $1,310, while below this, the recent low around $1,302.50 will see broad support sit between $1,300 - $1,305."
Asian stocks extended losses on Friday as worries about the health of Deutsche Bank weighed on financial shares and as oil prices inched back from near-one month highs on scepticism over OPEC's new plan to curb output.
"Gold is probably going to trade sideways for some time," said Brian Lan, managing director at Singapore-based gold dealer GoldSilver Central, adding that the charts were providing mixed signals.
"If stocks aren't doing well then we might see a little support for gold."
U.S. economic growth was less sluggish than previously thought in the second quarter as exports grew more than imports and businesses raised their investments.
However, contracts to buy previously owned U.S. homes dropped in August to the lowest level since January
When positive data is released, investors raise bets on a U.S. interest rate hike, which would increase the opportunity cost of holding non-yielding bullion.
"Any downward move in global equity markets in light of higher interest rates and over stretched equity valuations could result in a renewed move higher for gold...a stronger dollar could keep any over sized rallies somewhat in check," INTL FCStone analyst Edward Meir said in a note.
"We would rather trade gold somewhat from the long side right now, as we suspect we could see a bit more sloppiness for stocks in the light of Deutsche Bank uncertainties."
The dollar index, which measures the greenback against a basket of currencies, was firm at 95.573.
Silver was up 0.1 percent at $19.11 an ounce.
Platinum was up 0.2 percent at $1,029 an ounce and palladium rose 0.9 percent to $718.50. Palladium touched a 7-week high of $721.30 on Thursday.
(Reporting by Nallur Sethuraman in Bengaluru; Editing by Joseph Radford and Christian Schmollinger)
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