Gold held near its lowest in three weeks on Friday and looked set to post its worst week in two months on expectations that the Federal Reserve would raise US interest rates this year.
More downside is expected, analysts and traders said, with the looming US rate hike set to hit demand for the non-interest-paying asset, and also as the technical picture has weakened.
Spot gold was steady at USD 1,146.46 an ounce by 0337 GMT, not far from a three-week low of USD 1,144.20 in the previous session.
Bullion is down 1.5 percent for the week, the sharpest decline since the week ended Aug. 28.
"Technically the metal looks reasonably ominous on the charts with the next key support coming in around USD 1,120-22, which is the medium term uptrend that started in mid-July," said MKS Group trader James Gardiner.
Gold has been under pressure after the Fed on Wednesday surprised with a direct reference to its next policy meeting as a possibility for the first US rate hike in nearly a decade.
The Fed said raising rates at its next meeting would depend on progress made on employment and inflation, and omitted any reference to global developments affecting US economic activity.
Gold had rallied earlier this month on speculation that the softness in the global economy could prompt the US central bank to delay the rate hike to next year. The hawkish tone on Wednesday triggered a sell-off in the metal.
The strength in the dollar also hurt gold. The greenback climbed to a 2-1/2-month high on Wednesday after the Fed, though it has since given back some of those gains.
"The reality of tightening US monetary policy is still set to strengthen the US dollar and see Treasury yields rise, and against this backdrop we still expect both gold and silver to drop markedly," Societe Generale analysts said in a note.
Gold is on track to post its third straight annual decline, with a 3-percent drop.
The metal failed to get a safe-haven boost from a slide in equities and overnight data showing that US gross domestic product grew slower than expected.
Investors were keeping an eye on the currency markets following the Bank of Japan's decision to keep monetary policy steady on Friday.
The dollar slipped against the yen after the policy decision, though it remained largely steady against a basket of major currencies.
Any further weakness in the greenback could support gold.
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