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Gold heads for its worst week in more than a year

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Gold recovered some ground on Friday as a weakening of the US dollar relieved pressure on prices, but the metal remained near 19-month lows and looked set for its biggest weekly fall since May 2017.

[LONDON] Gold recovered some ground on Friday as a weakening of the US dollar relieved pressure on prices, but the metal remained near 19-month lows and looked set for its biggest weekly fall since May 2017.

Gold has tumbled 14 per cent from its April high as a rally in the greenback made US dollar-priced bullion more expensive for buyers with other currencies.

Investors seeking a safe place to store assets amid trade disputes and a Turkish currency crisis have preferred the dollar to gold, undermining the reputation of bullion as a safe haven.

But news of planned US-China trade talks and a steadying of Turkey's lira have steadied nerves.

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From a 13-month high on Wednesday against a basket of peers the dollar has weakened against the currencies of key gold markets - the euro zone, China and India, helping gold regain its footing, said ABN AMRO analyst Georgette Boele.

"I expect the dollar to peak in the coming weeks ... Gold should bottom out here," she said.

Spot gold was up 0.2 per cent at US$1,175.89 an ounce at 1016 GMT but down 2.9 per cent this week in its sixth consecutive weekly loss. On Thursday it touched US$1,159.96, the lowest since January 2017.

US gold futures were 0.1 per cent lower at US$1,182.30 an ounce.

"It's reasonable to expect prices to retrace some of the recent aggressive move down in the short term, but there doesn't seem to be evidence for a sustained move higher yet," said Nicholas Frappell, general manager at ABC Bullion.

Holdings of gold by exchange-traded funds tracked by Reuters are down 4 million ounces, or 7 per cent, from late May, with a new bout of selling this week.

Bets on lower prices on the Comex exchange, meanwhile, continue to build and now outweigh bets on higher prices by the largest quantity ever recorded.

Pressure from speculators may ease, however, said Ms Boele.

"Everyone who wants to be short is short, and if you are still long and have held your position all the way down, why would you sell here?"

On the technical side, Fibonacci resistance was at US$1,185.30 with support at the January 2017 low of US$1,146.20, analysts at ScotiaMocatta said, adding that gold would likely fall further.

In other precious metals, silver was up 0.1 per cent at US$14.62 an ounce but down 4.2 per cent this week, the biggest weekly loss since February. On Thursday it touched its lowest since February 2016.

Platinum was 0.8 per cent lower at US$771 and set for its biggest weekly drop since November 2015, down 6.8 per cent. It hit a 10-year low on Thursday.

Palladium gained 0.6 per cent to US$894.99 but was down 1.6 per cent this week having struck a one-year low.

REUTERS