Gold fell on Friday, on course for its biggest weekly decline in four weeks, as the dollar rebounded after a stronger-than-expected rise in US core consumer prices in April. Spot gold, higher initially, fell 0.2 percent to $1,203.60 an ounce by 1415 GMT. It was down 1.6 percent for the week, however, heading for its biggest fall since the week ended April 24 and 2.4 percent below a three-month high of $1,232.20 hit on May 14.
Volumes were expected to stay thin on Friday ahead of public holidays in Britain and the United States on Monday. "Gold remains very much dependent on the US economic data and traders are just trying to find out when the US rate hike will be," Natixis analyst Bernard Dahdah said. "It's not really exciting times for gold, there isn't investor appetite for the metal and that means less liquidity."
The dollar rose 0.8 percent versus a basket of leading currencies after data showed US Consumer Price Index rose 0.1 percent last month, while core CPI, which strips out food and energy costs, increased 0.3 percent, the largest gain since January 2013. The release preceded Fed Chair Janet Yellen's speech on the economy, due at 1700 GMT, that investors will peruse for clues on the timing of the next US interest rate increase. The Fed is aiming for inflation at 2 percent before it will consider raising rates, but has said that a significant pick-up is not a precondition to raise rates.
Recent weakness in US economic data has prompted investors to bet that interest rates will stay near zero till at least the latter part of the year. Higher US interest rates would increase the opportunity cost of holding non-yielding bullion. Investor sentiment towards gold has turned bearish as prices have fallen from three-month highs reached earlier this week. "Gold continues to be drawn towards the $1,200 pivot point. The metal has failed to move more than 3 percent on either side of $1,200 since mid-March," MKS Group said in a note.
Gold buying was slow this week in Asia, with the Chinese hooked on surging equities. Demand in India stayed weak and was unlikely to pick up as the wedding season cools. Silver was down 0.4 percent at $17.05 an ounce, heading for a 2.6 percent weekly fall. Platinum dropped 0.9 percent to $1,141.24 an ounce and palladium fell 0.9 percent to $771 an ounce.