Gold inched higher on Friday, as the dollar rally eased, although the greenback's remarkable performance overall and fears of aggressive U.S. interest rate hikes weighed on demand for bullion and set prices for a fifth straight weekly loss.
Spot gold was up 0.2% at $1,713.04 per ounce, as of 0252 GMT, but has lost 1.6% so far this week. U.S. gold futures rose 0.4% to $1,712.10.
"Gold has wilted in the face of a stronger U.S. dollar this week, but appears to be trying to form a temporary base ahead of $1,700.00. That said, it is displaying no signs of meaningful upside momentum with rallies limited to the $1,750.00 region," OANDA senior analyst Jeffrey Halley said.
The dollar edged off recent 20-year highs, easing some pressure on demand for greenback-priced gold among overseas investors, after sending bullion over 2% lower on Thursday.
"In the bigger technical picture, gold still looks vulnerable, with risks skewed to the downside," Halley said.
Two of the U.S. Federal Reserve's most hawkish policymakers said on Thursday they favoured another 75-basis-point interest rate increase at the central bank's policy meeting this month, not the bigger rate hike traders had raced to price in after a report Wednesday showed inflation was accelerating.
Higher interest rates and bond yields raise the opportunity cost of holding non-yielding bullion. Benchmark U.S. 10-year Treasury yields edged lower on Friday, buoying gold.
"Investment demand for gold is weakening," ANZ Research said in a note, adding that gold will remain under pressure from expectations of a large Fed rate hike.
Spot silver dipped 0.1% to $18.36 per ounce, but has fallen about 4.9% in what could be its seventh straight weekly loss.
Platinum gained 0.5% to $847.36. It has dropped about 5.5% this week, the most in three months.
Palladium rose 0.8% to $1,911.45, but lost about 12.4% this week, the most since last November.
(Reporting by Bharat Govind Gautam in Bengaluru; Editing by Amy Caren Daniel and Sherry Jacob-Phillips)