By A. Ananthalakshmi
SINGAPORE (Reuters) - Gold extended losses into a third session on Friday, dropping to a one-week low, on expectations that plunging oil prices could sap inflationary pressure, curbing the metal's appeal as a hedge.
Oil hit four-year lows around $70 a barrel, as OPEC resisted the temptation to cut back production following a more than 30 percent plunge in prices since June.
The drop in oil prices, along with the resulting strength in the dollar, hurt gold which is often seen as a hedge.
"Precious metals declined as lower oil prices prompted concerns about deflation," said ANZ analyst Victor Thianpiriya.
Spot gold had fallen 0.3 percent to $1,187.40 an ounce by 0741 GMT. It hit $1,181.30 earlier in the session - its lowest since Nov. 20.
The metal has lost over 1 percent for the week, snapping a three-week rally.
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U.S. gold futures slid 1 percent to a session low of $1,180.60.
The dollar index held firm, having made notable gains versus oil-related currencies, the Canadian dollar and Norwegian crown in the previous session.
"Gold sympathized with oil but I think there is a limit to the downward slide and we might hold $1,180 for now," said a trader in Tokyo, adding that the market was also eyeing the Swiss vote on central bank reserves on Sunday.
The vote is aimed at preventing the Swiss National Bank from offloading its gold holdings and obliging it to hold at least 20 percent of its assets in gold, compared with 8 percent last month.
The most-recent opinion poll showed support among Swiss voters for the initiative had slipped to 38 percent.
A surprise 'yes' vote, however, could prompt the Swiss central bank to buy about 1,500 tonnes of gold over the next few years, boosting bullion prices, analysts say.
"Most people in the market are already expecting a 'no' in the Swiss vote but it might still cause some sell-off. A 'yes' vote is unlikely but if it happens, we can see a jump in prices," the Tokyo-based trader said.
Among other precious metals, silver futures slid 3 percent. Platinum is down 1 percent for the week on outflows from the metal-backed exchange-traded funds.
Palladium was headed for a second weekly gain.
(Reporting by A. Ananthalakshmi; Editing by Joseph Radford, Anupama Dwivedi and Prateek Chatterjee)