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Gold edged up in thin trade on Friday but was on track for its biggest weekly fall since November as the dollar firmed after the US Federal Reserve hinted at an interest rate hike in the first half of 2015.
Bullion briefly touched a six-month high of $1,391.76 on Monday on tensions in Ukraine and concerns about growth in China before investors booked profits and turned their attention to safe haven US dollar.
Cash gold added $5.91 an ounce to $1,333.80 an ounce, having fallen to $1,320.24 on Thursday, its weakest since end-February. Low interest rates, which cut the opportunity cost of holding non-yielding bullion above other assets, had been a key factor driving bullion to all-time highs in recent years.
"I think the gold market has already shifted its focus back to the US dollar and US monetary policy outlook. The Fed is the main theme which is pressuring the market now," said Joyce Liu, investment analyst at Phillip Futures in Singapore.
"There are signs gold is supported at about $1,320 level, but I think the market is looking for direction. Although it has rebounded quickly, there's simply no impetus to go beyond $1,335. It's basically consolidating between $1,325 and $1,335."
A "golden cross" on the chart of spot bullion following a three-month rally suggests prices could climb further this year even after the Federal Reserve is set to keep trimming its bond-buying stimulus, analysts said.
US gold was at $1,334.30 an ounce, up $3.80.
Asian markets found their footing on Friday after Wall Street shook off concerns about Federal Reserve policy, while this week's spike in US yields kept the dollar underpinned near three-week highs.
Markets await comments from a quartet of Fed speakers later on Friday. St. Louis Fed President James Bullard, Dallas Fed president Richard Fisher, Minneapolis Fed president Narayana Kocherlakota and Fed governor Jeremy Stein are all due to talk.
The physical sector noted light buying from jewellers, but demand from main consumer China remained slow because of the weak yuan. Premiums for gold bars in Hong Kong were unchanged from last week at $1 an ounce to the spot London prices.
China's yuan fell to a 13-month low on Friday and was set to post its biggest weekly fall after the central bank lowered the midpoint of its permitted trading range, which is seen as a signal of official comfort with the currency's recent losses.
Weakening differentials between 99.99% purity gold on the Shanghai Gold Exchange and cash gold discouraged imports.
"Shanghai gold exchange is still at discounts to spot gold, and the market wants to know if the yuan will continue to depreciate," said a physical dealer in Hong Kong.
Looking ahead, the gold market has priced in tensions in Ukraine, which means a rebound could be capped at around $1,350 an ounce, he said.
US President Barack Obama raised the stakes in an East-West confrontation over Crimea on Thursday by targeting some of Russian President Vladimir Putin's closest long-time political and business allies with personal sanctions.
Gold jewellery exports from India edged higher by 1% in February to $718.36 million from a year earlier, an industry body statement said on Thursday.