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[NEW YORK] Gold prices hovered above a four-month low on Friday and were on track for their biggest weekly fall since May after progress on US tax reform fueled optimism about the US economy and boosted the dollar.
Stronger-than-expected US employment data on Friday also demonstrated healthy economic growth and suggested the Federal Reserve will raise interest rates next week, as expected.
Spot gold was up 0.1 per cent at US$1,247.81 an ounce by 2.34pm EST (1934 GMT), near Thursday's low of US$1,243.71, the weakest since July 26. It has fallen 2.6 per cent so far this week, its third consecutive weekly fall and the biggest since early May.
US gold futures settled down 0.4 per cent at US$1,248.40.
"Gold's luster was tarnished this week, not only by its failure to react at all positively to Trump's contentious Jerusalem announcement but also by its unseemly retreat through the bottom of a five month range," said Tai Wong, head of base and precious metals trading at BMO Capital Markets in New York.
"Bullion stabilised somewhat today, helped by weak earnings in the US employment report with bulls now pinning their hopes on a dovish hike by the Federal Reserve next week."
The US Fed is expected next week to announce a rise in interest rates and offer guidance on the pace of further increases. It has previously forecast three rate hikes in 2018.
That is likely to pressure gold prices because rising interest rates push up bond yields, reducing the appeal of non-yielding gold, and tend to boost the dollar.
Wall Street and other major global stock markets rose, and the US dollar was on pace for its fifth day of gains after the jobs data.
Selling of gold was triggered this week after it broke below US$1,260, the bottom of its trading range since September, and plunged below its 200-day moving average for the first time since July.
"You can put it down to the strength of the dollar and the ebullience of investors regarding equities and all things risk-on," said ETF Securities analyst Martin Arnold.
"When in such a positive mindset investors don't look for defensive assets like gold." Among other precious metals, platinum was down 0.8 per cent at US$895 an ounce after falling to the lowest since February 2016 at US$878.50. It was and on track to fall 5.5 per cent this week, its biggest weekly loss in 13 months.
Silver was up 0.5 per cent at US$15.81 but down nearly 4 per cent this week. Palladium was 0.6 per cent lower at US$1,007 an ounce.