LONDON: Gold fell on Friday, edging closer to seven-week lows touched earlier this week as equities came under pressure from disappointing earnings results, with the focus on US third-quarter growth data due later in the day.
US gross domestic product ( GDP) is expected to have edged up to 1.9 per cent in the last quarter, a Reuters poll showed, from 1.3 per cent in the previous quarter.
Analysts said a stronger reading could boost appetite for assets seen as higher risk, including commodities, and may fuel expectations for higher inflation, potentially lifting gold, which is often seen as a hedge against rising prices.
"We've seen recently a run of good US data," Standard Chartered analyst Daniel Smith said. "The risks are to the upside in the gold price. If you have an increase in risk appetite, you would have most metals moving up together, gold included."
Spot gold was down 0.48 per cent at $1,703.06 an ounce at 1158 GMT, not far off Wednesday's seven-week low of $1,698.39. US gold futures for December delivery were down $9.10 an ounce at $1,703.90.
World shares and commodities fell as lacklustre corporate earnings reports undermined investor confidence before the release of American growth data due out later on Friday.
Bullion rallied steadily to an 11-month peak above $1,795 an ounce in early October, with the US Federal Reserve's latest programme of purchasing mortgage-backed debt fuelling investment in the metal. But momentum has stalled since then.
"We've got a general 'risk reduction' hitting the markets. It's hitting equities on the back of earnings concerns since big US companies were not meeting earnings expectations," Fastmarkets' head of research Will Adams said.
Adams said investors could buy gold as a safe haven due to uncertainty over the outcome of the US election and the "fiscal cliff", automatic spending cuts and tax rises which threaten to send the country back into recession if Congress fails to reach a deficit reduction deal by the end of the year.
Also speculation is growing that the Bank of Japan will unveil further monetary stimulus at its policy meeting on Oct. 30 to help the export-focused economy through a global slowdown.
Ultra-low interest rates increase the appeal of gold, as it carries no yield and investors rely on a rise in the underlying price for a return on their investment.
