Gold near 2-week lows on stronger dollar, US data

The metal is headed for a 2 percent weekly drop -- its first in three weeks -- with expectations the Federal Reserve will maintain its economic stimulus now factored in.

Prices had gained 8 percent since hitting a three-month low in mid-October after soft U.S. data last month and Washington's budget gridlock led investors to believe the Fed would postpone the tapering of its bullion-friendly stimulus measures.

However, stronger U.S. data has rekindled some fears that a December tapering is possible, so investors have sold gold.

Spot gold had edged up 0.1 percent to $1,324.61 an ounce by 0345 GMT after Thursday's 1.4 percent slide.

"Until tapering begins, gold will be able to trade at this level in a tight range for a considerable period of time," said Helen Lau, an analyst at UOB Kay Hian Securities in Hong Kong. The pace of business activity in the U.S. Midwest jumped higher than expected in October and U.S. jobless claims declined last week in welcome news for the battered labour market.

Investors worry an improving economy could prompt the U.S. central bank to cut back soon on its $85 billion monthly bond purchases.

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