SINGAPORE: Gold fell from a 7-week high on Friday as speculators booked profits ahead of US GDP data, but prices were heading for a fourth week of gains with the Federal Reserve's pledge to keep interest rates near zero for some time supporting sentiment.
Although gold investors were relieved by the Fed's move to keep rates historically low, they will now turn their attention again to the outcome of the Greek debt crisis, with US funds still cautious about lending to banks in the troubled euro zone.
A Reuters poll showed gold's record-breaking rally of the last decade is set to extend into this year and the next as monetary policy stays loose and central banks build reserves.
Gold hit a high around $1,723 an ounce before slipping to $1,717.40 by 0258 GMT, down $2.64. Gold rallied to $1,729.76 on Thursday, its strongest since early December, but was still well below a record around $1,920 hit last September.
Prices were on track for a more than 3 percent rise this week.
"Some of the key data that market participants could be focusing on will be the first reading of the Q4 US GDP. I think a positive reading in general will be good for risk assets and gold as well," said Ong Yi Ling, an analyst at Phillip Futures in Singapore.
"I am actually looking for the next resistance level at about the $1,800 level," said Ong, adding that gold was prone to profit taking after recent gains.
US gold fell $8.0 an ounce to $1,718.7 an ounce.
The United States will release gross domestic product data for the fourth quarter later on Friday, and a 3 percent bounce as forecast could bolster risk-positive sentiment.
The euro held onto most recent hefty gains against the dollar on Friday, after hitting a five-week high, as the Fed's latest move on interest rates encouraged carry trades funded in dollars.
Investors' attention will again shift to Greece as debt talks with private creditors resume on Friday. Any resolution to avoid a messy default could see the euro break higher.
Greece and its private creditors made progress on Thursday in talks on restructuring its debt, both sides said, and they will continue negotiating on Friday with the aim of sealing an agreement within a few days.
Gold, typically a safe-haven asset, has been tracking the fortunes of the euro and stocks, with speculators selling the metal for cash to cover losses in other markets, especially during this period of uncertainty in Europe.
"There's some selling from Thailand, and also Indonesia. But I've told customers that it's better not to sell now because the market may still go up again," said a physical dealer in Singapore.
"Maybe it's better to wait until Monday when the Chinese market reopens and see whether they will buy some more gold or they will take profits."
In equities, Japan's shares held steady on Friday, halting recent rally, as disappointing corporate earnings from NEC Corp and Nintendo Co Ltd countered signals of improving US economic growth.
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