Gold settled nearly 1 percent lower on Friday as upbeat U.S. economic data boosted the dollar, raising anxiety over the Federal Reserve's future monetary policy course.
The metal dropped 2.9 percent this week, after climbing for two consecutive weeks, as expectations the Fed will maintain its economic stimulus seemed to have been factored in.
Spot gold fell as much as 1.3 percent to its lowest since Oct. 17 at $1,305.69 an ounce earlier and was last down 0.9 percent to $1,311 an ounce, extending Thursday's 1.4 percent slide.
U.S. gold futures for December settled 0.8 percent lower at $1,313.20 an ounce.
The dollar rose to six-week highs against a basket of currencies, after U.S. data showed the country's manufacturing sector expanded at its fastest pace in 2-1/2 years last month.
The data, coupled with positive U.S. numbers on Thursday and a statement by the Federal Open Market Committee that was not as dovish on the timing for curbing stimulus as investors had expected, soothed some worries about sluggish fourth-quarter growth.
Moreover, a sharp slowing in euro zone inflation, which left markets suddenly considering the chance of a cut in interest rates soon by the European Central Bank, weighed on the euro against the dollar.
"A drop in the euro on the back of weaker inflation figures and very good U.S. data has strengthened the dollar, in turn weighing on gold and I wouldn't be surprised to see a drop below $1,300 next week if there's more good data out of the U.S.,'' Natixis analyst Bernard Dahdah said.
A stronger U.S. currency makes dollar-denominated assets such as gold more expensive for foreign investors.
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