(Reuters) - Gold ticked lower in volatile trade on Friday, heading for a third straight week of losses as a brightening economic outlook in the United States prompted investors to park their money elsewhere, while India's plan to double the import duty on bullion erased some early gains. But physical dealers also noted panic buying from India, the world's largest gold consumer, after Finance Minister Pranab Mukherjee proposed to double to four percent the customs duty on gold from April, the start of the 2012/13 financial year. Gold hit an intraday high of $1,664.40 an ounce before slipping to $1,655.69 by 0818 GMT, down $2.04. "In fact India is buying today, although of course the volume is not great," a dealer in Singapore said. "I am not sure if the drop in prices is related to the announcement. But the thing is that the Indians are buyers today." In January, India raised the gold import duty 90 percent and doubled the tax on silver as the government grappled with a burgeoning fiscal deficit and looked to increase revenues. Increasing outlays that include subsidies for fuel and food have left the coalition government struggling to meet its fiscal deficit target. "Well, if the budget is getting through, then they will have to buy gold now," said another dealer in Singapore. Dealers said a 7 percent drop in gold prices since late February could also spur buying from jewelers in other regions. Gold hit a low of $1,634.09 on Wednesday, its weakest since January 16, on fading expectations of more monetary easing in the United States, which reduces the money available to buy safe-haven assets. "There's little need for a safe haven at the moment," said Lynette Tan, an analyst with Phillip Futures in Singapore. "Going forward, we could see gold maintained at this level, or even fall to about $1,620. I think gold will be sidelined at the moment, compared to the other risk assets." Bullion, which was heading for its longest weekly losing streak since early October, struck a record of around $1,920 last September on fears the euro debt crisis could stall global growth. U.S. April gold fell $3.60 to $1,655.90 an ounce, also erasing early gains. The dollar took a breather on Friday after investors booked profits on recent gains, but dealers said the uptrend could resume after the latest U.S. data gave further support to the view the recovery in the world's biggest economy was becoming more self-sustaining. "Gold still appears to be taking a hit and, if it is to escape the downward trend in the short term, it will have to overcome the price resistance at $1,726 per ounce," said Heraeus in a report. "Only then will it begin moving up again." Dealers awaited the release of the U.S. CFTC commitment of traders weekly data at 1930 GMT, which reflects investors' sentiment on gold. Net long futures positions held by speculators fell 20 percent in the week up to March 6, the biggest drop since August 2010. Platinum was still at a premium to gold because of supply worries. A month-long stoppage at the largest facility of Impala Platinum (IMPJ.J), the world's second-largest producer, is expected to cost nearly 200,000 ounces in production and would probably cut deliveries in April by as much as half. Among equities, the Nikkei average ended up for the fourth straight day on Friday as investors picked up cyclical shares on the brightening U.S. economic outlook, offsetting profit-taking in exporters that have rallied in recent sessions on the softer yen.

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