Gold falls with the rise of the dollar
By 0114 GMT, gold fell in spot transactions 0.2 percent to $ 1714.72 an ounce. Prices fell to their lowest level in more than a year at $1,680.25 on Thursday, before closing up 1.3 percent.
Gold is still heading for its first weekly gain in six weeks, up nearly 0.5%.
US gold futures rose 0.1 percent to $1,714.90 an ounce.
The dollar rose 0.2 percent against rival currencies, which makes gold priced in the US currency more expensive for buyers of other currencies.
"Gold is on a downtrend and rallies that start are short-lived because gold is under pressure from the fact that inflationary expectations are declining," said Edward Meir, analyst at ED&F Capital Markets.
The European Central Bank joined with its global peers in the fight against spiraling inflation as it raised interest rates more than expected on Thursday, even as the euro zone economy suffered from the impact of the Russian war on Ukraine.
The US Federal Reserve's policy meeting is scheduled for next week and policy makers are expected to raise interest rates by 75 basis points.
"We are waiting to hear how tight they will be on interest rates. If they still think inflation is a problem or they are going to keep raising interest rates, that will have a very negative impact on gold," Meir said.
Higher interest rates increase the opportunity cost of owning the precious metal, which does not generate returns.
Thursday's data showed that the number of Americans who filed for unemployment benefits last week rose to an eight-month high, in the latest sign of the economy slowing under the weight of strong interest rates and inflation.
As for other precious metals, silver fell in spot transactions 0.3 percent to $ 18.78 an ounce, while platinum increased 0.3 percent to $ 873.92 and palladium rose 0.2 percent to $ 1895.86.
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