Gold ended near an eight-month low on Friday, dropping almost 1 percent as a lack of physical and investment demand and widespread commodities losses weighed on bullion.
Gold's losses also pressured silver and platinum group metals, with platinum hitting a 2014 low earlier in the session.
For the week, the yellow metal lost 3.1 percent, its biggest weekly drop since May, hurt by fears of an earlier-than-expected interest rate hike by the Federal Reserve.
Bullion fell after data showed U.S. retail sales rose broadly in August and consumer sentiment hit a 14-month high in September, supporting expectations for sturdy economic growth in the third quarter.
"There is very little off-take from the physical sector. There is no demand from India and China. It's just not a lot of general interest in precious metals and commodities," said Bruce Dunn, partner at New Jersey-based precious metals merchant Auramet.
Chart: Precious Metals
Spot gold fell as low as $1,227.25 an ounce, its weakest since Jan. 10. It was last down 1 percent at $1,228. Gold has lost 4.5 percent in the last two weeks, its biggest two-week drop since March.
futures settled down $7.50 at $1,231.50.
The dollar index eased 0.1 percent against a basket of major currencies but posted its ninth consecutive week of gains. It also rose to a six-year high against the yen on speculation the Federal Reserve may strike a more hawkish tone when it meets next week.
"The market remains under pressure from expectations for a stronger U.S. currency in the longer run and with physical buyers still absent, unwilling to support prices on fresh lows," Andrey Kryuchenkov, an analyst at VTB Capital, said.
Among the main consumers of physical bullion, dealers said a one-quarter drop in local gold prices over the past year had shaken the confidence of Indians in the precious metal as a store of value.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said on Friday that its holdings had dropped 0.32 ton to 788.40 tons on Thursday.
—By Reuters