Spot gold prices eked out small gains on Friday after data showed US economic growth picked up in the third quarter, but the metal was heading for its first three-week loss in more than a year on uncertainty over the future of the US Federal Reserve's monetary stimulus.
Bullion reversed early losses after the US Commerce Department said gross domestic product expanded at a better-than-expected 2 percent annual rate, driven by a late burst of consumer spending.
Analysts said, however, that uncertainty over global economic recovery and questions on the future of US monetary policy that has been ultra-loose under Fed Chairman Ben Bernanke could dent gold's appeal as an inflation hedge.
"I don't believe gold is able to rally off of that (GDP) data for now. Gold is a momentum asset and its momentum is not there right now," said Jeffrey Sica, chief investment officer at SICA Wealth, which manages more than USD 1 billion in assets.
Spot gold edged up 0.02 percent at $1,712.23 an ounce by 2:17 p.m. EDT (1817 GMT).
Spot bullion was set for a weekly drop of 0.5 percent, which would mark its first three-week consecutive loss in more than a year. Gold posted a four-week decline after a rally to a record above USD 1,920 an ounce in September 2011.
US COMEX gold futures for December delivery settled 0.06 percent lower at USD 1,711.9 an ounce, with trading volume on track to finish below its 30-day average, preliminary Reuters data showed.
Traders said the 0.7 percent decline in the December price this week stemmed partly from concerns over a report that Bernanke has told close friends that he probably will not stand for a third term at the central bank even if President Barack Obama wins the November 6 election.
"Without Bernanke, monetary stimulus from the Federal Reserve could be greatly reduced, and that will weigh on the price of gold," Sica said.
Gold's outlook hinges on uncertainty related to the US election and the so-called "fiscal cliff", a series of automatic spending cuts and tax increases in 2012 if Congress fails to reach a deficit-reduction deal by the end of the year.
On charts, gold has come under technical pressure after it several times ran near formidable resistance at USD 1,800, which it has not broken since November 2011, and failed each time, said Adam Sarhan, CEO of Sarhan Capital.
Silver was down 0.09 percent at USD 32.04 an ounce.
Bullion rallied to an 11-month peak above USD 1,795 an ounce in early October after the Fed's latest program of purchasing mortgage-backed debt stirred inflation worries.
Momentum has since stalled, with weak global economic data helping send prices below USD 1,700 this week, when US durable goods data showed the first cutbacks in investment in more than a year by cautious businesses.
Year-to-date, gold is up nearly 10 percent, on track to gain for a 12th consecutive year. Bullion's gains in the last several years have largely been powered by economic uncertainty related to the Fed's bond-buying to stimulate growth.
Platinum group metals are on track to fall more than 3 percent this week as economic worries and easing supply fears from top producer South Africa triggered heavy selling.
Platinum dropped 1.38 percent to USD 1,546.25 an ounce and palladium fell 1.28 percent to USD 594.0 an ounce.
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