Gold fell and was on the way to its first weekly decline in three weeks on Friday, as fading chances of a U.S. stimulus agreement before the Nov. 3 presidential election dented the metal's appeal as an inflation hedge.
Spot gold fell 0.3% to $1,901.87 per ounce. Bullion is down 1.4% so far this week. U.S. gold futures settled 0.1% lower at $1,906.40.
"With a stimulus bill this year highly uncertain, gold remains beholden to the USD," said Tai Wong, head of base and precious metals derivatives trading at BMO.
"While sentiment for gold remains strongly bullish without a strong short-term driver, we seem to be oscillating around $1,900 unable to substantially break the month-long range of $1,850-$1,950."
The dollar index eased 0.2% on the day, but was on track for a weekly gain, making it more expensive for holders of other currencies to buy gold.
A stronger-than-expected U.S. retail sales report lifted appetite for riskier assets, but factory production unexpectedly fell in September.
Democrats and Republicans seemed unlikely to agree on a U.S. stimulus deal before Election Day even as coronavirus cases continue to rise and a labour market recovery stalls.
Gold, which has risen about 25% so far this year, is considered a hedge against inflation and currency debasement amid the unprecedented global levels of stimulus.
"With so much event risk on the horizon, culminating with the U.S. elections, we have likely seen the lows in gold for the next month or so," Jeffrey Halley, senior market analyst at OANDA, said in a note.
"Gold's likely to shift into a $1,900 to $1,975 an ounce range as the elections draw near."
Silver shed 0.3% to $24.25 per ounce, but was down over 3% for the week. Platinum eased 0.2% to $862.05, while palladium slipped 0.9% to $2,332.20.