NEW YORK (Reuters) - Gold rose in very thin trade on Thursday as slowing growth in China's factory output mildly boosted investor hopes for more monetary stimulus from one of the world's top economic engines, which could boost demand for bullion.
China's factory activity slowed unexpectedly in July to its weakest in more than three years, leaving room for more stimulus to meet China's annual 7.5 percent growth target.
Volume in U.S. gold futures looked set to notch its lowest daily level of 2012 due to uncertainty about any monetary action the Federal Reserve and European Central Bank may take.
Investor doubts on economic stimulus can be reflected by an extremely narrow $15 range this week between $1,602 and $1,617 an ounce.
"Without any news from central bankers this week, traders are not entering new positions, waiting for the next dose of news from either the ECB or the Fed," said Jeffrey Sherman, commodities portfolio manager at DoubleLine Capital LP.
"Gold is likely to stay in this trading range until we receive more definitive statements," said Sherman, whose firm has over $40 billion assets under management.
Spot gold inched up 0.3 percent at $1,616.66 an ounce by 3:01 p.m. EDT.
U.S. COMEX gold futures for December delivery settled up $4.20 an ounce at $1,620.20.
COMEX volume was less than 70,000 lots by 3 p.m., preliminary Reuters showed. That was about 60 percent below its 30-day average and on track for a 2012 low.
"You are going to need big volume to get the metal moving. The path of least resistance to the upside is going to need those stimulus measures to come true," said Phillip Streible, senior commodities broker at futures brokerage R.J. O'Brien.
CHINA, CENBANK MEETING EYED
A fall in Chinese consumer inflation to a 30-month low in July suggested the country's central bank could follow up rate cuts in June and July to boost the economy.
Investors looking for quantitative easing (QE) -- increasing money supply by buying government bonds to keep interest rates low -- were frustrated when data showed the number of Americans filing new claims for jobless benefits fell unexpectedly last week, while the trade deficit in June dropped to the smallest in 1-1/2 years.
Bullion investors appeared to be on the sidelines waiting for possible hints from Fed Chairman Ben Bernanke and other central bankers meeting in Jackson Hole, Wyoming on August 31.
Sean McGillivray, head of asset allocation at Great Pacific Wealth Management, said gold could resume its rally if global central banks unveil a coordinated, sizable monetary stimulus.
Among other precious metals, silver gained 0.4 percent to $28.09 an ounce, while spot platinum climbed 0.3 percent to $1,408.99 an ounce and spot palladium was up 20 cents at $582.10 an ounce.
(Additional reporting by Jan Harvey in London; Editing by Bob Burgdorfer)