(REUTERS) -- Gold prices slipped back towards $1,650 an ounce on Friday as investors cashed in gains after a three-session rally, with confidence in the metal still soft as consumers in major Asian bullion-buying centres held off making fresh purchases.
The metal lifted from lows in line with a recovery in the euro after a smooth Italian bond auction eased concerns over peripheral euro zone debt markets, but remained under pressure.
Spot gold was down 0.2 percent at $1,653.30 an ounce at 1135 GMT, off an earlier low of $1,649.94, while U.S. gold futures for June delivery were down $6.70 at $1,653.80.
It has largely held between $1,610-1,680 an ounce in April, its tightest monthly spread since June, but is on track to decline 0.8 percent in the month as a whole.
The euro/dollar has held above $1.30 for some time, in the $1.30-$1.32 range, which coincides with gold also being caught in a range, Societe Generale analyst Robin Bhar said. If the euro zone crisis deepens and we see the euro/dollar correct below $1.30, that could give a bit of a lift to gold.
The euro recouped losses on Friday after a well-received auction of Italian debt eased jitters over the financial health of the euro zone, which were earlier sparked by a downgrade of Spain's sovereign debt and dismal Spanish economic data.
Standard & Poor's cut Spain's credit rating to BBB-plus from A late on Thursday and gave it a negative outlook, warning it expects the government's budget deficit to deteriorate even more than previously thought.
Safe-haven German bund futures rose to record highs, while Spanish 10-year bond yields broke above 6 percent.
The downgrade of Spain by S&P has focused attention again on the euro zone problems and may cap gold's advance if the euro stays in the doldrums, Marex Spectron said in a note.
U.S. figures out today include GDP and Personal Consumption at 1330 BST and the University of Michigan Confidence figure at 1455 BST, it added. Keep an eye on these for clues as to what the afternoon will bring us.
ASIAN BUYERS UNINSPIRED
Physical demand for the metal in major consumer India was light after the last major gold-purchasing festival of the wedding season earlier this week, while the listless performance of spot prices deterred buyers elsewhere in Asia.
Gold bar premiums in Singapore were around $1 an ounce above London prices, while in Hong Kong, premiums were quoted in the range between $1 and $1.60 an ounce.
People don't have much confidence that prices will move higher once we approach (the) $1,660-$1,670 level, a Hong Kong-based dealer said.
He said trading volume has been sluggish as speculators shifted interest to better-performing markets, such as equities.
Among other precious metals, silver was down 0.2 percent at $31.06 an ounce
The metal is set to end the week down 1.8 percent after sliding below $30 an ounce for the first time since mid-January on Wednesday. Prices fell in six of the previous eight weeks.
Sales of American Eagle silver coins from the U.S. Mint are on track to hit their lowest monthly rate since July 2008 in April, figures from the Mint showed, at 1.28 million ounces, against 2.542 million ounces in March.
Silver closed (Thursday) higher at 31.20 but remains within the range of Monday's steep sell-off, ScotiaMocatta said in a note.
Resistance is at 31.71, Monday's high. Support is at 30.00, around yesterday's low. The gold-silver ratio is trading lower at 53.26, its first pause after four sessions higher.
Spot platinum was up 0.2 percent at $1,565.74 an ounce, while palladium was up 0.2 percent at $667.03.