BENGALURU - Gold dipped on Friday, on track for its biggest weekly fall since August, as the dollar rose towards 16-month highs after U.S. Federal Reserve stuck to its tight monetary stance and looked set to deliver another rate hike in December.
Spot gold was 0.5 percent lower at $1,218.01 per ounce at 1156 GMT, having touched its lowest since Nov. 1 at $1,217.20.
Gold is down more than 1 percent for the week so far, which would be its biggest decline since the week of Aug. 17.
U.S. gold futures fell 0.5 percent to $1,219.2 per ounce.
"It is pretty clearly a dollar-related move today, which has happened since the latest decision from the U.S. Fed," said Capital Economics analyst Ross Strachan.
The sentiment in the market "is quite cautious after recent spikes, consolidating in the $1,220 to low $1,230 levels and not breaking out of that."
Spot gold touched a peak of $1,243.32 on Oct. 26, its highest since mid-July.
The dollar firmed towards a 16-month high underpinned by a robust U.S. economy and rising interest rate environment, making bullion more expensive for holders of other currencies. [USD/]
Rate increases also pressure gold prices by increasing the opportunity cost of holding non-yielding bullion.
"We remain cautious on gold here as roughly half the recent advance seems to have been rolled back in recent days on account of a stronger dollar and more resiliency in U.S. equity markets," said INTL FCStone analyst Edward Meir in a note.
"In addition, U.S. interest rates seem to be on the march again ... there is not much of an upside trigger that could lead to a sustainable rally."
The Fed held interest rates steady on Thursday, having hiked rates three times this year, but remained on track to keep gradually tightening borrowing costs, even one in December because of U.S. economic strength, rising inflation and solid jobs growth.
"We are expecting the current Fed tightening cycle to end sooner, by the middle of next year ... so we are expecting gold prices to rise to $1,300 by the end of next year," Strachan added.
Among other precious metals, silver was down 0.8 percent to $14.29 per ounce. The metal was headed for its biggest weekly percentage decline in nine weeks, slipping more than 2 percent so far.
Platinum dipped 0.7 percent to $857.86 an ounce. The metal was down about 1 percent so far for the week, its biggest fall since late September.
Palladium fell 0.6 percent to $1,117.38 per ounce, though it was up 0.2 percent for the week, set for its fourth weekly gain.