By Eileen Soreng
BENGALURU (Reuters) - Gold prices fell on Friday and were on track to mark their biggest weekly decline in five weeks due to a firmer dollar, as investor focus shifted towards an expected U.S. interest rate hike next week.
Spot gold was 0.3 percent lower at $1,238.32 per ounce as of 0837 GMT. Earlier in the session, prices hit their lowest level since Dec. 6 at $1,236.80.
The metal is down about 0.8 percent so far for the week.
U.S. gold futures were down 0.38 percent at $1,242.6 per ounce.
There is some downward pressure from a stronger dollar, said Vandana Bharti, assistant vice-president of commodity research, SMC Comtrade Ltd.
"I don't see much downside on gold going forward... The market is waiting for a strong trigger and currently it's watching out for the Fed meeting."
The dollar index, which measures the greenback against a basket of six major currencies, was up about 0.2 percent.
The U.S. central bank is widely expected to raise interest rates at its Dec. 18-19 meeting, its fourth rate hike this year, though greater focus will centre on the policy outlook for 2019, over which there is more uncertainty.
"Market sentiment towards zero-yielding gold is at risk of souring ahead of the Fed meeting next week where interest rates are expected to be hiked. However, with the Fed potentially taking a pause on rate hikes next year, gold remains somewhat supported," said Lukman Otunuga, a research analyst at FXTM.
"The near-term outlook for gold hangs on the dollar performance... Bulls remain safe above the $1,240 support level with $1,250.60 acting as a level of interest," Otunuga added.
Lower interest rates reduce the opportunity cost of holding bullion and weigh on the dollar.
Among other precious metals, spot palladium was down about 1.6 percent at $1,239.70 per ounce, having hit an all-time high of $1,269.25 in the previous session. The metal was on track to mark third week of gains with prices up about 1.5 percent so far.
Silver fell 1 percent to $14.61 per ounce.
Platinum was down 0.1 percent at $792.60 per ounce and was set to post a weekly gain after declining for five weeks.
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