Gold prices fell on Friday after a European Central Bank (ECB) official called for scaling back the bank's stimulus program, although losses were capped when weaker-than-expected U.S. economic data raised questions about further interest rate hikes. ECB board member Sabine Lautenschlaeger made the most explicit call so far from an ECB policymaker for paring the bank's 2.3 trillion euros money-printing program.
"For gold this is bad news because this continues the trend of the market pricing in the normalization of monetary policy," said Jens Pedersen, senior analyst at Danske Bank in Copenhagen.
But he said there had already been plenty of headlines about the ECB planning an exit from its bond buying and the U.S. Federal Reserve reducing its balance sheet after its big quantitative easing program.
Spot gold was down 0.6 percent at $1,321.88 an ounce, on track for its biggest weekly decline since early July.
U.S. gold futures for December delivery settled down 0.3 percent at $1,325.20 an ounce.