Gold heads for biggest weekly loss since December

Gold prices steadied near $1,565 an ounce on Friday as the European Central Bank's decision to ease collateral requirements lifted the euro, but gold remained on track for its biggest weekly loss this year after U.S. stimulus measures disappointed.

The metal posted its steepest one-day drop since February 29 on Thursday, a day after the Federal Reserve held off on a new round of quantitative easing, or printing money to buy bonds, to boost growth in the United States.

Talk that more stimulus measures were on the way, which would maintain pressure on long-term interest rates, keeping the opportunity cost of holding gold at rock bottom and weighing on the dollar, had buoyed the metal earlier this month.

It has since erased the bulk of its gains both for June and for the year as a whole.

Gold found support as the euro hit session highs versus the dollar, with market participants citing a combination of short-covering and news on the ECB easing collateral requirements, in a move designed to ease pressure on Spain.

The June gold futures on the COMEX today fell to 1572.0 dollars per ounce.