Gold fell to two-week lows on Friday, heading for its first weekly drop in three as upbeat U.S. economic data lifted the dollar, raising anxiety over the Fed's future course.
The metal was headed for a 2.7 percent weekly drop as expectations the U.S. Federal Reserve will maintain its economic stimulus seem to be now factored in.
Spot gold was down 0.6 percent to $1,314.71 an ounce by 1059 GMT after Thursday's 1.4 percent slide. It earlier fell to a lowest level since Oct. 22 at $1,313.89.
Comex gold futures for December fell $8.80 to $1,314.50 an ounce.
The dollar rose to two-week highs after U.S. data on Thursday showed the pace of business activity in the Midwest region rose more than expected in October and weekly jobless claims declined, soothing some worries about sluggish fourth-quarter growth.
The U.S. currency was also boosted by weakness in the euro after a plunge in euro zone inflation left markets suddenly eyeing the outside chance of a cut in interest rates by the European Central Bank soon.
"The weakness we have been seeing in gold in the past two days is due to the after-effects of the FOMC statement and also the extremely low inflation rate in the euro zone," Commerzbank analyst Daniel Briesemann said.
"These factors are very supportive of the dollar, which in turn weighed on precious metals prices."
A stronger dollar makes dollar-denominated assets like gold more expensive for foreign investors.
Markets' focus remains heavily on U.S. monetary policy and how soon the Federal Reserve will begin tapering its $85 billion a month support programme, having delayed a move in September.
Later on Friday, investors will closely monitor the U.S. ISM survey of manufacturing for October.
Prices had gained 8 percent since hitting a three-month low in mid-October after soft U.S. data last month and Washington's budget gridlock led investors to bet the Fed would postpone the tapering of its bullion-friendly stimulus measures.
As a gauge of investor sentiment, New York's SPDR Gold Trust , the biggest gold-backed ETF, reported an outflow of 34 tonnes in October, its biggest monthly drop since July. That brings its outflows for the year to 479 tonnes, or more than $20 billion this year. Holdings of the fund are near four-year lows of 872 tonnes.
Spot silver fell 0.5 percent to $22.32 an ounce. It fell 3.5 percent on Thursday, its biggest one-day loss in a month, and hit its lowest since Oct. 17 at $21.66 earlier.
The biggest silver ETF, the iShares Silver Trust, also recorded a monthly outflow of 127.4 tonnes in October, its first since June.
Spot platinum was unchanged at $1,445.90 an ounce, gaining modest support from news that 7,000 members of South Africa's National Union of Mineworkers will down tools at Northam Platinum on Sunday night in a strike over wages. Spot palladium fell 0.1 percent at $734.47 an ounce.