(REUTERS) -- Gold fell on Friday, following losses in the euro and U.S. equities,as uncertainty over negotiations for a bailout package for Greece prompted investors to sell the metal and hoard cash.
Bullion posted a second straight weekly loss, as a lack ofconcrete steps to avert a ruinous Greek default more than offseta rally earlier this week fueled by the U.S. Federal Reserve'slong-term outlook for near-zero interest rates.
Technical support lifted gold off a two-week low hit duringhe session, but scenes from a workers' strike in Greece and thegovernment's failure so far to reach a decision on accepting thebailout pressured financial markets across the board.
In a situation where the financial system may be at risk,people may need a lot of cash to buffer themselves against apotential shock such as a Greek default, said Bart Melek, headof commodity strategy at TD Securities.
They may swap out gold along with other assets for cash,Melek said.
Spot gold fell 0.9 percent to $1,715.99 an ounce asof 2:49 p.m. EST (1949 GMT), having hit a low of $1,703.69.
U.S. gold futures for April delivery settled down$15.90 an ounce at $1,725.30. Trading volume was largely in linewith its 30-day average and set to be the highest this week.
Gold's losses were limited as liquidity improved a day afterthe biggest operator of U.S. futures exchanges, CME Group, lowered trading margins for a range of commoditiescontracts including gold, silver and platinum.
Risk aversion drove down equity markets and industrialcommodities such as crude oil and copper, as investors favoredsafe-haven U.S. Treasuries, sending the dollar higher againstthe euro.
Today, the market is in risk-off mood again with stockmarkets weaker as well, said Alex Zumpfe, a trader at Heraeusprecious metals house. Gold is facing some selling pressureafter support levels didn't trigger sufficient buying interest.
Gold looks vulnerable to a correction after rising nearly 10percent so far this year, particularly on possible negativeheadlines related to the euro zone debt crisis, analysts said.
TECHNICAL SUPPORT HELD
Bullion notched a 0.5 percent loss for the week, its firstconsecutive weekly decline since early December, and Friday'sdecline extended the metal's losses to a third straight day.
CitiFX said gold's outlook remains bullish as it held abovesupport at its 55-week moving average, September 2011 low andlong-term channel base. A breach above $1,802 an ounce couldsuggest a rally to record $2,070, it said.
Citigroup's technical research unit said silver couldoutperform gold. It cited a possible near-term breakout for thewhite metal.
The bullion market largely ignored news Indonesia could banexports of some raw materials, including gold and silver, from2014. Indonesia was the world's seventh-largest gold producerlast year.
Silver was down 1.2 percent at $33.46 an ounce. Spotplatinum was down 99 cents at $1,651 an ounce, while spotpalladium fell 1.3 percent to $697.35.