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Gold edged lower on Friday, backing off the two week high struck in the previous session as the dollar stayed firm, but the yellow metal was still on track for its biggest weekly gain in nearly two months.

"Gold's move could be closely tied to the dollar. We expect gold to be mostly range-bound for the next few weeks," said Ronald Leung, chief dealer, Lee Cheong Gold Dealers in Hong Kong.

"People will try to push up the prices between now and the next U.S. Federal Reserve meeting. We don't think the Fed would act before the presidential elections in November."

"The ongoing strength in the global equity markets and some signs of stabilization in the dollar could both start chipping away at gold's underlying strength," INTL FCStone analyst Edward Meir said in a note.

"Gold could come under pressure quickly if market opinion shifts more decisively in favor of a December rate hike. Also, the long-run expectation is that the Fed will eventually raise rates, which may stem gold gains," said HSBC analyst James Steel.

The dollar index was a tad lower on Friday, leaving it on track for its worst week in a month after Federal Reserve trimmed its long-term interest rate expectations and the Bank of Japan retooled its monetary policy framework.

The dollar index was down a bit at 95.388 .DXY, while the euro was up 0.1 percent against the dollar at $1.1215 EUR=. The dollar was up 0.15 percent at 100.90 yen JPY=, not far from a nearly four-week low of 100.10 struck on Thursday and on course to shed more than 1 percent for the week.

Reference: Reuters