Gold fell on Friday after a European Central Bank official called for scaling back the bank`s stimulus programme and strong U.S. inflation data raised the prospects of another rate hike.
ECB board member Sabine Lautenschlaeger on Friday made the most explicit call so far from an ECB policymaker for paring the bank`s 2.3 trillion euros money-printing programme.
Data showing that euro zone wages grew at their fastest rate in two years in the second quarter also boosted chances of reining in ECB stimulus.
"For gold this is bad news because this continues the trend of the market pricing in the normalisation of monetary policy," said Jens Pedersen, senior analyst at Danske Bank in Copenhagen.
But he said there had already been plenty of headlines about the ECB planning an exit from its bond buying and the U.S. Federal Reserve reducing its balance sheet after its big quantitative easing programme.
"It`s difficult to see gold really falling much further on this policy normalisation agenda," he added.
Spot gold was down 0.5 percent at $1,323.11 an ounce by 1245 GMT. It was down more than 1 percent for the week, on track for its first weekly decline in four.
U.S. gold futures for December delivery fell 0.2 percent to $1,327.30.
Those "normalisation" actions by central banks tend to drive rates higher, push bond yields up and put pressure on gold, a non-yielding asset.
Gold briefly pared losses after data on Friday showed U.S. retail sales unexpectedly fell in August as Hurricane Harvey likely depressed motor vehicle purchases.
Friday`s numbers were in contrast to strong U.S. inflation data on Thursday which increased prospects of an interest rate hike in December.
The Fed`s next monetary policy meeting begins on Sept. 19.
Gold largely seemed to shrug off the firing of another missile by North Korea on Friday that flew over Japan`s northern island of Hokkaido.
Silver fell 0.6 percent to $17.64 an ounce and was set to mark its first weekly decline in four.
Platinum dropped 0.4 percent to $974.30 an ounce and was down more than 2 percent for the week, on track for its biggest weekly drop since early May.
Palladium gained 0.1 percent to $923.47, after marking a four-week low on Thursday. It was heading for a second weekly decline.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)