Gold prices fall on dollar, stocks; on track for worst week since May 2017

Gold prices on Friday fell more than 1 percent to their lowest since the January, headed for their biggest weekly decline in more than 1-1/2 years, as the dollar strengthened and global stock advances spurred risk-taking. Spot gold was at $1,293.38 an ounce at 2:18 pm ET (1918 GMT), having fallen below the key 1,300 level for the first time since Jan. 28. It is down about 2.6 percent so far this week, the most since May 2017.

U.S. gold futures settled down 1.3 percent at $1,299.2. "The U.S. dollar index and two-year Treasury yields have moved up over the last couple of days and these factors have prompted people to take some profits (in gold)," said Bart Melek, head of commodity strategies at TD Securities in Toronto. "We are also seeing a continued reaction to Federal Reserve statements where hikes are still on the menu, given that data seems to be fairly strong in the United States."

Better-than-expected U.S. gross domestic product data on Thursday boosted Treasury yields, making non-yielding bullion less attractive. The data also helped lift the dollar to a 10-week high against the Japanese yen earlier in the session.  Higher global stocks also weighed on gold, analysts said. "Better sentiment on the stock markets and a reluctance by the physical gold investors are weighing on its price," Commerzbank analysts said.

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Reflecting investor appetite for bullion, holdings of the SPDR Gold Trust, the world`s largest gold-backed exchange-traded fund, on Thursday fell to their lowest since late December.  Palladium rose 0.2 percent to $1,546.51 an ounce. The metal hit an all-time peak of $1,565.09 this week and is headed for a fourth consecutive week of gains.

"The threat of a possible strike in South African mines is keeping the prices high," said Miguel Perez-Santalla, vice president of Heraeus Metal Management in New York.  "Even though it has been forestalled by the court of South Africa, the threat still exists, and until that threat is taken off the table we will see both platinum and palladium prices still strong."

Platinum dipped 1.4 percent to $857.75 per ounce, but remained on track for a third straight weekly gain. Silver dropped 2.6 percent to $15.20 per ounce after hitting $15.14, a low last seen on Jan. 22. The metal was down 4.5 percent so far for the week, its biggest decline since the week of Feb. 2, 2018.