Gold closed modestly lower on Friday, marking its biggest weekly decline in four weeks, as the dollar rebounded after a stronger-than-expected rise in U.S. core consumer prices in April.
U.S. gold futures closed down 10 cents at $1,204.00 an ounce, down 1.7 percent on the week—its biggest fall since the week ended April 24. Spot gold, higher initially, was unchanged at $1,206 an ounce.
Volumes were were thin on Friday ahead of public holidays in Britain and the United States on Monday.
"Gold remains very much dependent on the U.S. economic data and traders are just trying to find out when the U.S. rate hike will be," Natixis analyst Bernard Dahdah said.
"It's not really exciting times for gold, there isn't investor appetite for the metal and that means less liquidity."
The dollar rose 0.8 percent versus a basket of leading currencies after data showed U.S. Consumer Price Index rose 0.1 percent last month, while core CPI, which strips out food and energy costs, increased 0.3 percent, the largest gain since January 2013.
The release preceded Fed Chair Janet Yellen's speech on the economy, due at 1 p.m. ET, that investors will peruse for clues on the timing of the next U.S. interest rate increase.
The Fed is aiming for inflation at 2 percent before it will consider raising rates, but has said that a significant pick-up is not a precondition to raise rates.
Recent weakness in U.S. economic data has prompted investors to bet that interest rates will stay near zero till at least the latter part of the year.
Higher U.S. interest rates would increase the opportunity cost of holding non-yielding bullion.
Investor sentiment towards gold has turned bearish as prices have fallen from three-month highs reached earlier this week.
"Gold continues to be drawn towards the $1,200 pivot point. The metal has failed to move more than 3 percent on either side of $1,200 since mid-March," MKS Group said in a note.
Gold buying was slow this week in Asia, with the Chinese hooked on surging equities. Demand in India stayed weak and was unlikely to pick up as the wedding season cools.