By Jan Harvey
LONDON (Reuters) - Gold steadied off an eight-week low on Friday, but remained on track for a fourth straight weekly drop as growing speculation that the Federal Reserve will press ahead with interest rate hikes hurt investor demand.
The metal fell for seven straight sessions to Thursday, its longest run of losses in more than six months, after minutes of the Fed's latest policy meeting indicated last week that a rate rise may be on the cards sooner rather than later.
That view has been consistently supported by central bank officials this week. An increase in U.S. rates would raise the opportunity cost of holding gold, while boosting the dollar, in which it is priced.
Spot gold was at $1,220.30 an ounce at 1236 GMT, little changed from late on Thursday but off an earlier low of $1,211.30. U.S. gold futures for June delivery were down 50 cents an ounce at $1,219.90.
The metal remains up 15 percent this year after a sharp first-quarter rally, but has fallen 4.5 percent since the Fed minutes were released last week.
"Expectations for summer rate hikes from the Fed have changed over the past couple of weeks, and looking at that, combined with the dollar being off its lows, equities near the highs, and yields higher, it's a warranted move in gold," UBS analyst Joni Teves said.
"That's especially as you're coming from quite a big build-up in positioning. Last week's CFTC data showed that net longs were around 98 percent of the record high."
Fed Governor Jerome Powell, a voting member of the U.S. central bank's rate-setting committee, said on Thursday he felt the economy was on a "solid footing" and within reach of the Fed's inflation goals.
The Atlanta Fed on Thursday predicted the economy is on track to grow by a 2.9 percent annualized rate in the second quarter.
The gold market is awaiting further direction from comments from Fed Chair Janet Yellen later on Friday.
"If she (Yellen) nudges expectations towards a rate increase, the futures fund curve should start to show a higher probability of an imminent move," INTL FCStone said in a note.
Silver touched its lowest in nearly six weeks at $16.12, and was later down 0.2 percent at $16.25 an ounce.
Platinum was up 0.3 percent at $991.75 after touching its weakest in over a month at $981, and was on track for its biggest weekly decline since Jan. 15. Palladium was 1.5 percent higher at $548.25.
(Additional reporting by Koustav Samanta and Vijaykumar Vedala in Bengaluru; Editing by Ruth Pitchford and David Evans)
