Gold futures on the COMEX Division of the New York Mercantile Exchange on Wednesday further declined on Friday, as a stronger dollar reduced the appeal of gold. Besides, disappointing Italian bond auction added to the negative tone.

The most active gold contract for December delivery declined 10. 2 U.S. dollars, or 0.6 percent, to 1,685.7 dollars per ounce.

Market analysts said the worsened situation in Europe continued to prompt investors to choose the U.S dollar as their currency of choice. Italy sold short-term bonds on Friday, but the yields nearly doubled amid wide concerns over the region's debt problem.

The dollar index, which measures the value of the dollar against a basket of other major currencies, hiked to 79.63 on Friday, up 0.68 percent from the prior trading day.

A trader noted that gold has behaved more like a risky asset in recent sessions, failing to benefit from safe-haven fund flows as investors grow more nervous about the wider economic picture and fund availability.

The trader added that the meal would further decline, if global markets face a liquidity squeeze that prompts further liquidation and margin selling.

Silver for December delivery lost 87 U.S. cents, or 2.7 percent, to 31.884 dollars per ounce. Platinum for January delivery also declined 25.2 dollars, or 1.6 percent, to 1,533.1 dollars per ounce.

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