Gold fell to a six-month low on Friday, breaking through technical support near $1,630 an ounce, as the euro weakened against the dollar ahead of a G20 meeting, which should give more clues on currencies.
Gold hit a low of $1,625.44 an ounce, its weakest since August 21, and was at $1,626.76 by 1013 GMT, down 0.6 percent. U.S. gold futures for April delivery fell 0.6 percent to $1,626.30.
Spot prices were headed for a 2.3 percent drop this week, the biggest weekly fall for two months. Technical analysts expect support to hold at the key $1,625 level, near the January low that gold briefly breached in earlier trade.
But a dearth of investment interest after better economic data eroded expectations of the scope of U.S. monetary easing, as well as weakness in physical demand during the Lunar New Year holidays, is maintaining pressure on the metal.
"Technically, gold should be supported (in the $1,620 area), but fundamentally, given the lack of buying it could even go lower," BofA-Merrill Lynch analyst Michael Widmer said. "There is a lot of focus on economic growth."
"People are certainly looking at the G20 meeting and the statement, as currency talks may become a strong focus for the gold market going forward," he added.
The Group of 20 major economies struggled on Friday to find common ground on currencies and borrowing, exposing rifts between advocates of a dash for growth and supporters of more austerity to revive the world economy.
The euro fell against the dollar, while shares in Europe turned flat after euro zone data showed trade surplus rose less than expected in December as imports fell steeper than exports.
Signs that Europe's economic woes have not been resolved were highlighted by weak data on Thursday. By contrast, U.S. weekly jobless claims fell more than forecast last week, giving a further boost to the dollar.
Gold investment has softened this year on signs that economies such as the U.S. and China are picking up, while continued problems of sovereign debt and economic weakness in Europe seem to be priced in by the market.
"The market now seems to be getting used to the more positive frame of mind of a recovering U.S. (economy) - which entails lower probability of continued QE and in turn a lower gold price," MKS Capital said in a note.
SOROS CUTS STAKE IN SPDR, PAULSON HOLDS
Data released on Thursday showed billionaire investor George Soros cut his holdings in the SPDR Gold Trust, the world's largest gold exchange-traded fund, by more than half in the fourth quarter, while GLD's biggest shareholder John Paulson left his holdings unchanged.
A few other notables also cut exposure to gold, including investment fund PIMCO and Tiger Management's Julian Robertson, who dissolved his entire stake in Market Vectors Gold Miners ETF.
The SPDR's holdings fell 0.23 percent on Thursday from Wednesday, while those of the largest silver-backed ETF, New York's iShares Silver Trust, rose 0.26 percent during the same period.
The physical market was again subdued in Asia. Chinese players, however, were expected to take advantage of the lower prices to replenish stocks when they return from their week-long public holiday for the Lunar New Year celebrations.
"Chinese physical demand at these lower levels will be seen when they return to the market next week, it just depends to what degree," MKS Capital said.
Gold imports into India surged 23 percent to 100 tonnes in January, as traders snapped up supplies ahead of a hike in duty by a government struggling to rein in its import bill.
In other precious metals, platinum and palladium gave up gains made at the start of the week and followed the rest of the complex lower.
Spot platinum fell 1.1 percent to $1,688.99 an ounce, while palladium was down 0.5 percent to $759.18 after hitting a new best since September 2011 at $775 on Wednesday. TOCOM palladium rallied to its highest since mid-2001 this week on hopes of rising demand from auto makers in China.
Spot silver was at a one-month low of $30.20 an ounce, down 0.6 percent.