LONDON - Gold fell on Friday after a European Central Bank official called for scaling back the bank's stimulus programme and strong U.S. inflation data raised the prospects of another rate hike.
ECB board member Sabine Lautenschlaeger on Friday made the most explicit call so far from an ECB policymaker for paring bank's 2.3 trillion euros money-printing programme.
"For gold this is bad news because this continues the trend of the market pricing in the normalisation of monetary policy," said Jens Pedersen, senior analyst at Danske Bank in Copenhagen.
But he said there had already been plenty of headlines about the ECB planning an exit from its bond buying and the U.S. Federal Reserve reducing its balance sheet after its big quantitative easing programme.
"It's difficult to see gold really falling much further on this policy normalisation agenda," he added.
Spot gold <XAU=> was down 0.5 percent at $1,323.21 an ounce by 1030 GMT. It was down more than 1 percent for the week, on track for its first weekly decline in four.
U.S. gold futures <GCcv1> for December delivery fell 0.2 percent to $1,327.30.
Those "normalisation" actions by central banks tend to drive rates higher, push bond yields up and put pressure on gold, a non-yielding asset.
Also weighing on gold was strong U.S. inflation data on Thursday which increased prospects of an interest rate hike in December, while later on Friday U.S. retail sales data is due.
The Fed's next monetary policy meeting begins on Sept. 19.
"Traders will be closely watching this evening's retail sales numbers. Another better-than-expected number could lead to U.S. dollar strength and continue to cap gold into the week's end," said Jeffrey Halley, senior market analyst at OANDA.
Gold largely seemed to shrug off the firing of another missile by North Korea on Friday that flew over Japan's northern island of Hokkaido.
Silver fell 0.3 percent to $17.69 an ounce and was set to mark its first weekly decline in four.
Platinum dropped 0.4 percent to $974.60 an ounce and was down more than 2 percent for the week, on track for its biggest weekly drop since early May.
Palladium gained 0.1 percent to $923.60, after marking a four-week low on Thursday. It was heading for a second weekly decline.