Gold ended down on Friday, on track for a second consecutive weekly loss, as signs of a steadily improving U.S. economic outlook and indications the Federal Reserve may end its stimulus program prompted investors to buy riskier assets such as equities.
With a lack of key U.S. economic data on Friday, bullion investors lightened positions ahead of the weekend as they digested the minutes from the Fed's Open Market Committee (FOMC) meeting in January which suggested stimulus measures may end earlier than thought.
Gains in U.S. equities also made gold, a traditional safe haven, less attractive. U.S. benchmark index S&P 500 was up six percent year to date and managed to hold above 1,500 points despite weakness this week.
"The waning down of the safe-haven play has definitely put pressure on gold, as we have seen the risk-on trade into equities for well over a month now," said Matthew Schilling, senior commodities trader of futures brokerage RJ O'Brien.
Spot gold softened to near $1,573 an ounce, staying on course for a weekly decline of about two percent, its second week in the red. U.S. gold futures for April delivery finished the session down about $5.80 an ounce at $1,572.80, not far from this week's six month low.
Confidence in gold was still fragile after the metal fell to a seven-month low of $1,554.49 on Thursday after minutes from the Fed's latest policy meeting triggered worries the central bank might slow its bond buying program.
ETF Liquidation Continues
Investors continued to bail out of SPDR Gold Trust this week, depressing prospects of significant price gains, analysts said. The fund is on track for its biggest weekly outflow since August 2011.
The world's biggest gold-backed exchange-traded fund reported that holdings dropped 8.89 tonnes on Feb. 21 to 1,290.306 tonnes, the lowest in more than five months. In the previous session, holdings slumped more than 20 tonnes, its biggest one-day drop in 18 months.
Platinum and palladium, this year's best performing precious metals, also surrendered gains, extending the hefty losses they posted on Thursday.
Spot platinum fell more than 0.3 percent to trade below $1,605 an ounce, after prices fell 3 percent to a five-week low of $1,593.45 in the previous session. Palladium rose nearly 0.75 percent to hover near $733 an ounce, having fallen to a one-month trough of $707.22 on Thursday.
Spot silver fell a full percent to trade around $28.40 an ounce.