Gold slips on firm dollar; set for best weekly gain in 2 months

Gold edged down on Friday, after touching a two-week high in the previous session, on a stronger dollar, but was on track for its biggest weekly gain in nearly two months.

Spot gold dropped 0.2 percent to $1,334.41 an ounce by 0411 GMT; but was on track for a weekly gain of nearly 2 percent, the highest since end-July.

US gold futures slipped 0.5 percent to $1,338.20 an ounce.

"Gold's move could be closely tied to the dollar. We expect gold to be mostly range-bound for the next few weeks," said Ronald Leung, chief dealer, Lee Cheong Gold Dealers in Hong Kong.

"People will try to push up the prices between now and the next US Federal Reserve meeting. We don't think the Fed would act before the presidential elections in November."

The dollar index, which measures the greenback against a basket of currencies, was up 0.1 percent at 95.534.

A stronger greenback makes dollar-denominated gold more expensive for holders of other currencies.

Spot gold may stabilise around a support at $1,335 per ounce, and then retest a resistance at $1,343, as indicated by its wave pattern and a Fibonacci projection analysis, according to Reuters technical analyst Wang Tao.

"The ongoing strength in the global equity markets and some signs of stabilization in the dollar could both start chipping away at gold's underlying strength," INTL FCStone analyst Edward Meir said in a note.

Asian shares edged closer to a 14-month high on Friday as investors grew more convinced that the Federal Reserve is settling into a phase of very gradual interest rate hikes.

Gold is likely to see profit-taking in Asia, given the higher prices and decent regional buying in the range of $1,310 to $1,320 last week and early this week, said Alex Thorndike, senior precious metals dealer, MKS PAMP Group.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.69 percent to 950.92 tonnes, for a second straight session on Thursday.

Silver fell 0.6 percent to $19.72. Among the precious metals, silver posted a weekly gain of 5 percent, since the week ending July 1.

Platinum edged up 0.3 percent at $1,054.20. It rose as much as 1.7 percent in the previous session. Palladium was down 0.5 percent at $690.20, after rising 1.5 percent on Thursday.