By Jan Harvey
LONDON (Reuters) - Gold eased on Friday, heading towards its biggest weekly decline in 2-1/2 months, as the dollar climbed from last week's three-year low on the back of higher Treasury yields.
Spot gold was down 0.1 percent at $1,330.51 an ounce at 1240 GMT, its fifth losing session in six. U.S. gold futures were flat at $1,332.90 an ounce.
Spot prices have shed 1.4 percent this week, their biggest weekly decline since early December, after failing to sustain a brief push back above $1,360 an ounce last Friday.
"Once again gold failed to break resistance at $1,360/1,370," ActivTrades analyst Carlo Alberto de Casa said, adding that gold had staged a small rebound from the first support range of $1,320 on Thursday.
"Gold remains lateral or slightly positive, (and) the main trend will change only below $1,300," he said, adding that further dollar strength could weigh on gold but it was unlikely to push it below this level.
Volatility has jumped across financial markets this month as investors worry about the pace of U.S. rates hikes in the wake of data showing a rise in inflation.
St Louis Fed President James Bullard on Thursday tried to tamp down expectations of four rate hikes in 2018. Three increases are widely anticipated.
Stocks have steadied after recent sharp losses, while the dollar has found its feet after falling last week to its lowest since the end of 2014. Rising U.S. yields have put the currency on track for its second biggest weekly gain of the year.
In addition to their impact on currencies, higher yields can also weigh on gold in their own right, as they increase the opportunity cost of holding non-interest bearing bullion.
The dollar index, which measures the greenback against a basket of currencies, was up 0.1 percent.
On the physical gold markets, buying was muted in China after the week-long Lunar New Year holiday, traders said, which closed financial markets until Thursday.
"China's return to the market following their New Year holidays did little to ignite interest in gold," MKS said in a note. "Mild buying only (acted) to provide underlying support for prices, rather than see the metal higher."
Among other precious metals, silver was little changed at $16.62 an ounce, palladium was down 0.1 percent at $1,036.74 and platinum was flat at $993.50.
(Additional reporting by Eileen Soreng in Bengaluru; editing by Edmund Blair and Jason Neely)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
