Gold eased on Friday, set for its biggest weekly loss in two months, but prices were still in sight of recent 11-month highs as wider markets sought clarity on when and whether Spain would request a bailout to shore up its finances.
Standard & Poor's cut the country's credit rating to one notch above junk on Wednesday, while the country's economy minister said on Friday there was no political resistance to a bailout request for within the euro-zone.
Spot gold was 0.1% lower at $1,766.24 U.S. per ounce in late Friday trading. U.S. gold futures were also lower at $1,768 U.S.
Bullion, which is seen as a hedge against inflation, briefly moved in positive territory as investors reacted to U.S. data showing a greater-than-expected acceleration in producer prices in September.
But it soon returned to previous levels and looked set for a weekly decline of 0.8%, its biggest weekly drop in since Aug 5.
Further slippage could be on the cards as the market is lacking momentum, but loose monetary policy measures adopted by major central banks were expected to support prices in the long run.
A recent poll by Reuters found that analysts remain bullish on the outlook for gold.
Credit Suisse said on Friday it had raised its 2013 average price forecast for bullion to $1,840 U.S. per ounce from $1,720 per ounce. The bank also revised its forecast for silver to $33.10 from $29.20 U.S. per ounce.
In India, a softening rupee has pushed up local gold prices and is dragging on buying interest from elsewhere in the country.
Meanwhile, net gold flows from Hong Kong to China in August dropped 26% from a year earlier, as high gold prices and a slowdown in economic growth weighed on appetite, official Hong Kong trade data showed.
Among other metals, platinum was slightly lower in the absence of fresh news from South Africa, where industrial unrest has shuttered the operations of major platinum miners including Anglo American Platinum, the world's largest producer of the metal.
Spot platinum was 0.4% lower at $1,668.24 U.S. per ounce.
Wildcat strikes broke out in South Africa's platinum belt in August and quickly spread across other sectors of Africa's largest economy. Around 100,000 workers remain on strike, including 75,000 in the mining industry.
Palladium fell 0.9% to $657.81 U.S. per ounce.
Spot silver was lower at $33.79 U.S., heading for a weekly loss of 2%.
