Gold prices fell in Asian trade on Friday and were on track to mark their biggest weekly decline in five weeks due to a firmer dollar, as investor focus shifted towards an expected US interest rate hike next week. Spot gold was 0.3 percent lower at $1,238.32 per ounce as of 0837 GMT. Earlier in the session, prices hit their lowest level since December 6 at $1,236.80.
The metal is down about 0.8 percent so far for the week. US gold futures were down 0.38 percent at $1,242.6 per ounce. There is some downward pressure from a stronger dollar, said Vandana Bharti, assistant vice-president of commodity research, SMC Comtrade Ltd.
"I don't see much downside on gold going forward... The market is waiting for a strong trigger and currently it's watching out for the Fed meeting." "Market sentiment towards zero-yielding gold is at risk of souring ahead of the Fed meeting next week where interest rates are expected to be hiked. However, with the Fed potentially taking a pause on rate hikes next year, gold remains somewhat supported," said Lukman Otunuga, a research analyst at FXTM.
"The near-term outlook for gold hangs on the dollar performance... Bulls remain safe above the $1,240 support level with $1,250.60 acting as a level of interest," Otunuga added. Lower interest rates reduce the opportunity cost of holding bullion and weigh on the dollar. Spot gold remains neutral in a range of $1,240-$1,253 per ounce, and an escape could suggest a direction, according to Reuters technical analyst Wang Tao.