Gold lower on dollar gains ahead of U.S. data, Fed officials remarks

By Clara Denina

LONDON (Reuters) - Gold fell on Friday as the dollar rose and investors focused on U.S. retail sales data and comments from Federal Reserve officials that could put the central bank on track to raise interest rates by year-end.

Spot gold was down 0.3 percent at $1,253.61 an ounce by 1154 GMT. U.S. gold futures fell 0.2 percent at $1,254.70 an ounce.

"We are in the midst of one of those large Fed-related moves - we saw an almost $100 upswing in June and July and we are now seeing a $100 decline in September and October as markets see a Fed rate hike coming in," ING Bank senior strategist Hamza Khan said.

The dollar gained 0.4 percent against a basket of six major currencies. [FRX/]

Friday's U.S. retail sales data at 1230 GMT will be followed by remarks by Fed Chair Janet Yellen, who will address a Boston Fed economics conference at which Boston Fed governor Eric Rosengren will also speak. [ECONUS]

The Fed's minutes of its last rate-setting meeting, released on Wednesday, showed several policymakers felt a rate hike was warranted "relatively soon" if the U.S. economy continued to strengthen, and prompted investors to raise their bets of an increase at its December policy meeting.

Markets are now pricing in around a 70 percent chance that the Fed will move.

Gold is highly sensitive to increases in U.S. interest rates, which can lift the opportunity cost of holding non-interest-bearing gold.

"The dollar will likely push higher going into year-end, offering gold its most formidable headwind and even countering the impact of weaker equities," INTL FCStone said in a note.

Spot gold may consolidate further in a narrow range of $1,250-$1,266 per ounce for one day before falling to the Oct. 7 low of $1,241.20, according to Reuters technical analyst Wang Tao.

Holdings of the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.28 percent to 961.57 tonnes on Thursday. [GOL/ETF]

Among other precious metals, silver inched up 0.1 percent at $17.46 an ounce.

Platinum fell 0.5 percent to $932.25 an ounce, after touching its lowest since March in the previous session. It was down 3.5 percent for the week.

Palladium was unchanged at $638.10 after touching a new three-month low of $633.22 an ounce.

(Additional reporting by Swati Verma in Bengaluru; Editing by Elaine Hardcastle and Alexander Smith)