US gold futures fell but steadied just above fresh 3-1/2-month lows early Friday as follow-through liquidation from a previous sell-off and talk of central bank sales pressured the metal, traders said. April delivery gold at the New York Mercantile Exchange's COMEX division was down $1 at $417.50 an ounce by 10:11 am EST (1511 GMT), after bouncing back from an early low of $415.50 which was the contract's cheapest since October 13. The early high was $419.50.
A lower euro against the dollar and concerns over the potential for sales of gold from International Monetary Fund reserves were the main drivers behind the slippage.
"The dollar is strengthening and news overhead has been a little more bearish than bullish, with talk about the IMF selling (gold)," said Andy Brosoff at Mitsubishi International Corp.
Gold found support earlier after a US Treasury official said the United States could not accept UK debt relief plans, adding that the US was not convinced of the need to sell IMF gold reserves to finance Third World debt relief.
Gold hit 3-1/2-month lows Thursday, partly on concerns over the proposal, which is expected to be a topic at the weekend's Group of Seven rich nations policymakers meeting.
Spot gold traded at $415.80/6.60, below the last New York close at $416.50/7.40. The afternoon fix in London was $415.90.
March silver lost 3.2 cents to $6.645 an ounce, trading from $6.71 to $6.605. Spot reached $6.62/65 against $6.65/67 previously. Friday's fix was at $6.655.
NYMEX April platinum inched up 20 cents to $867 an ounce. Spot platinum was at $862/866. March palladium rose 50 cents to $184 an ounce. Spot stood at $180/184.
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