Gold stuck near 7-1/2 mth low; set for worst week since May

By A. Ananthalakshmi

SINGAPORE (Reuters) - Gold fell to fresh 7-1/2 month lows on Friday, poised to post its worst week in more than three months as a stronger dollar and easing tensions in Ukraine curbed appetite for safe-haven bullion.

The dollar index was holding near a 14-month high on Friday and was firmly on track to post its ninth consecutive week of gains, boosted by strong economic data and expectations the U.S. Federal Reserve would soon raise interest rates.

Gold was also hurt after Ukraine's president said this week Russia had removed the bulk of its forces from his country, raising hopes for a peace drive now underway after five months of conflict in which more than 3,000 people have been killed.

Spot gold had slipped 0.5 percent to $1,234.49 an ounce by 0323 GMT, after earlier falling to $1,231.95 - its lowest since late January.

"A stronger dollar and higher bond yields have been an issue for gold all week, and remain a headwind going forward," said ANZ analyst Victor Thianpiriya.

"With geopolitical concerns also easing, there seems to be little support for gold in the short-term."

Gold is down 2.7 percent for the week, its biggest weekly drop since the week ended May 30.

Weak investor interest was reflected in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, that saw holdings drop 0.32 tonnes to 788.40 tonnes on Thursday. [GOL/ETF]

Bearish momentum indicators have accelerated, and a sustained break below $1,232 could take gold near $1,180, ScotiaMocatta said.

The weakness in gold also pulled down other precious metals, with silver falling to a 14-month low, heading for a loss for the eighth week out of nine.

Platinum, trading near its lowest since December, was poised for its worst week since April. With a near 7-percent drop, palladium was the worst performing precious metal of the week. The decline marks the metal's biggest weekly loss since June 2013.

(Reporting by A. Ananthalakshmi; Editing by Joseph Radford)