Gold hits 2-wk lows on dollar strength; set for 1st weekly drop in 5

By Sethuraman N R

REUTERS - Gold on Friday hit fresh two-week low on a stronger dollar, with selling ahead of the Lunar New Year holidays adding pressure and leaving the metal on track to record its first weekly loss since late December.

Spot gold prices were down 0.5 percent at $1,182.87 per ounce at 0525 GMT, having hit their lowest since Jan. 11 at $1,182.45.

U.S. gold futures fell 0.6 percent to $1,183.

"A combination of things including a strong dollar, thin volumes ahead of the Chinese (or Lunar) New Year and weak longs is putting pressure on the market," said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.

"Most of Asia is already off for the holidays, which is a good time for many to short the metal ... You can see the bids are very weak, which shows the demand right now," he said.

Spot gold may break a support at $1,182 per ounce and fall to the next support at $1,171, as suggested by a Fibonacci retracement analysis and a double-top, according to Reuters technical analyst Wang Tao.

The week-long holiday that many in Asia take for the Lunar New Year is likely to keep the markets quiet, traders said.

The dollar edged up on Friday, rebounding from a seven-week low on optimism over the U.S. economic outlook and corporate earnings, although U.S. President Donald Trump's protectionist policies raised uncertainties for global trade.

The dollar index, which measures the greenback against a basket of currencies, rose 0.1 percent on Friday to 100.500, after touching a seven-week low of 99.793 in the prior session.

"We suspect the fourth-quarter GDP will likely be stronger, leading to a stronger dollar and exerting more pressure on gold before Trump possibly comes to the rescue with another market surprise," INTL FCStone analyst Edward Meir said. U.S. fourth-quarter GDP estimate is due later in the day.

Spot silver fell 0.2 percent to $16.73 an ounce, while platinum fell 0.5 percent to $970.60.

Palladium fell 0.3 percent to $718.83, after hitting its lowest since Jan. 4 at $711.15 on Thursday. Palladium has lost more than 8 percent so far this week, its worst weekly performance since January 2016.

"The movements in palladium are not necessarily justified by the fundamentals but broader investor sentiment," HSBC analyst James Steel said.

"We believe a drop back to the December lows of $650 is not fundamentally justified. That said, the momentum may lead to a test of $700, however."

(Reporting By Nallur Sethuraman in BENGALURU; Additional reporting by Yuzuha Oka in TOKYO; Editing by Tom Hogue and Amrutha Gayathri)