Gold fell on Friday after a European Central Bank official called for scaling back the bank's stimulus program, although losses were capped when weaker than expected U.S. economic data raised questions about further rate hikes.
ECB board member Sabine Lautenschlaeger made the most explicit call so far from an ECB policymaker for paring the bank's 2.3 trillion euros money-printing program. Data showing that euro zone wages grew at their fastest rate in two years in the second quarter bolstered the case for reining in ECB stimulus.
"For gold this is bad news because this continues the trend of the market pricing in the normalization 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 program.
"It's difficult to see gold really falling much further on this policy normalization agenda," he added.
Spot gold was down 0.4 percent at $1,324.58 an ounce by 1350 GMT. It was down 1.5 percent for the week, on track for its first weekly decline in four. U.S. gold futures for December delivery fell 0.1 percent to $1,328.30.
Those "normalization" actions by central banks tend to drive rates higher, push bond yields up and put pressure on gold, a non-yielding asset.
Gold pared losses after data on Friday showed U.S. retail sales unexpectedly fell in August and industrial output dropped for the first time since January due to the impact of Hurricane Harvey.
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. Commerzbank said August gold imports into India, the world's second biggest gold consumer, were the lowest so far this year.
"Potential buyers have clearly been put off by the sharply rising gold price," a note said. "If gold prices do not fall, the usual recovery of Indian gold demand in the autumn is likely to prove less pronounced this year."
Silver fell 0.6 percent to $17.64 an ounce and was set to mark its first weekly decline in four.
Platinum dropped 0.8 percent to $970.80 an ounce after touching $968.30, the lowest since Aug. 25. It was down 3 percent for the week, on track for its biggest weekly drop since early May.
Palladium shed 0.5 percent to $918, after marking a four-week low on Thursday. It was heading for a second weekly decline.
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