Gold gave up earlier gains and fell to a one-week low on Friday, surrendering to a stronger dollar and falling oil markets, and looked set to post its third straight weekly loss.
Spot gold, firmer initially, fell to its lowest since Dec. 26 at $1,172.95 an ounce in earlier trade and was down 0.4 percent at $1,176.80 by 1257 GMT.
Continue Reading Below
Liquidity was thin in post-holiday trading, with Chinese and Japanese markets closed. Prices were heading for a 1.6 percent weekly decline, the third straight week of losses.
U.S. gold futures for delivery in February fell 0.6 percent at $1,177.40 an ounce.
Bullion ended 2014 down nearly 2 percent, following a 28 percent slump the previous year.
Anticipated U.S. interest rate hikes and a recovering economy may strengthen the dollar's appeal in 2015. Higher rates weigh on non-interest-bearing bullion, while a stronger dollar makes gold more expensive for holders of foreign currencies.
"An almost unchanged gold price in 2014 was quite impressive considering that we had a 12 percent rise in the dollar during the same time," Saxo Bank senior manager Ole Hansen said.
"But as long as we continue to see expectations for a rising dollar, investors will not start to suddenly look at gold as an investment opportunity."
The dollar rose to its highest level in nearly nine years, up 0.6 percent against a basket of six major currencies, mostly on a lower euro, which hit a 4-1/2 year low after the European Central Bank fanned expectations it would take bolder steps on monetary stimulus later this month.
The benign impact of lower European equities after subdued manufacturing data from the eurozone and muted trading, was more than offset by a stronger dollar and falling oil prices.
Gold is usually seen as an hedge against oil-led inflation.
Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.25 percent to a fresh six-year low of 709.02 tonnes on Wednesday. Redemptions in 2014 reached 140 tonnes, well below the 460 tonne outflow seen in 2013.
Silver rose 0.3 percent to $15.68 an ounce after posting a 19.3 percent decline in 2014.
Platinum fell 0.8 percent at $1,196.70 an ounce, having fallen 12 percent last year.
With an 11 percent jump, palladium was the best-performing precious metal in 2014, mostly on supply concerns from top producer Russia. Prices were unchanged at $788.30 an ounce. (Additional reporting by A. Ananthalakshmi in Singapore; Editing by Michael Urquhart and David Holmes)