* Gold eyes another weekly dip
* Technicals weak, support seen near $1,120 (Updates prices)
By A. Ananthalakshmi
SINGAPORE, Oct 30 (Reuters) - Gold held near its lowest in three weeks on Friday and looked set to post its worst week in nearly two months on expectations that the Federal Reserve would raise U.S. interest rates this year.
More downside is expected, analysts and traders said, with the looming U.S. rate hike set to hit demand for the non-interest-paying asset, and also as the technical picture has weakened.
Spot gold XAU= ticked up 0.3 percent to $1,148.50 an ounce by 0648 GMT, but still not far from a three-week low of $1,144.20 in the previous session.
Bullion is down 1.3 percent for the week, the sharpest decline since the week ended Sept. 11.
"Technically the metal looks reasonably ominous on the charts with the next key support coming in around $1,120-22, which is the medium term uptrend that started in mid-July," said MKS Group trader James Gardiner.
Gold has been under pressure after the Fed on Wednesday surprised with a direct reference to its next policy meeting as a possibility for the first U.S. rate hike in nearly a decade.
The Fed said raising rates at its next meeting would depend on progress made on employment and inflation, and omitted any reference to global developments affecting U.S. economic activity.
Gold had rallied earlier this month on speculation that the softness in the global economy could prompt the U.S. central bank to delay the rate hike to next year. The hawkish tone on Wednesday triggered a sell-off in the metal.
The strength in the dollar also hurt gold. The greenback climbed to a 2-1/2-month high on Wednesday after the Fed, though it has since given back some of those gains. USD/
"The reality of tightening U.S. monetary policy is still set to strengthen the U.S. dollar and see Treasury yields rise, and against this backdrop we still expect both gold and silver to drop markedly," Societe Generale (PA:SOGN) analysts said in a note.
Gold is on track to post its third straight annual decline, with a 3-percent drop.
The metal failed to get a safe-haven boost from a slide in equities and overnight data showing that U.S. gross domestic product grew slower than expected. urn:newsml:reuters.com:*:nLNNTLEBHB
Investors were keeping an eye on the currency markets following the Bank of Japan's decision to keep monetary policy steady on Friday. urn:newsml:reuters.com:*:nT9N11G02P
The dollar slipped against the yen JPY= after the policy decision, though it remained largely steady against a basket of major currencies .DXY . urn:newsml:reuters.com:*:nT9N0VZ03M
Any further weakness in the greenback could support gold.
PRICES AT 0648 GMT
Metal
Last
Change Pct chg
Spot gold
1148.5
2.99
0.26 Spot silver
15.64
0.08
0.51 Spot platinum
993
3.5
0.35 Spot palladium
674.5
6.5
0.97 Comex gold
1148.8
1.5
0.13 Comex silver
15.63
0.08
0.51
COMEX gold and silver contracts show the most active months