(Updates prices)
By A. Ananthalakshmi
SINGAPORE, Oct 23 (Reuters) - Gold edged higher from its lowest in over a week on Friday as the dollar gave back some of its overnight gains, but the metal was poised to snap two straight weekly gains on a boost to expectations for a U.S. rate rise this year.
Spot gold XAU= rose 0.6 percent to $1,173.16 an ounce by 0702 GMT. It fell as low as $1,162.50 in the previous session, the lowest level since Oct. 13.
For the week, the metal is down 0.3 percent, after posting two straight weekly gains. U.S. gold futures GCcv1 eased about 1 percent for the week, the biggest loss in six weeks.
The dollar climbed to its highest in nearly a month on Thursday against a basket of major currencies, but dropped 0.1 percent on Friday.
Upbeat U.S. housing and labour market data, and stronger equity markets, however, capped gains in gold.
"The general expectation is for the Fed to raise rates next year, but in recent days we have seen some robust data from the U.S. and cannot completely rule out a December rate hike," said a trader in Hong Kong.
Some long positions have been liquidated since the metal failed to hold above $1,190 an ounce, he said.
Bullion has been hurt by uncertainty over the timing of the first U.S. rate hike in nearly a decade. Investors believe higher rates could hurt demand for non-interest-paying gold.
Rate rise expectations have largely been pushed out to next year over concerns about the health of the global economy, but recent U.S. data has been strong.
U.S. home resales rebounded strongly in September and new applications for unemployment benefits hovered around 42-year lows last week, data on Thursday showed. urn:newsml:reuters.com:*:nL1N12M15S
Bullion wasn't seeing much support from the physical markets. Festive demand for gold in India, the second biggest consumer, got off to a tepid start, with local prices heavily discounted to the global benchmark. urn:newsml:reuters.com:*:nL3N12M31R
Demand in top consumer China was also lacklustre, dealers said, while premiums in Hong Kong dropped.
PRICES AT 0702 GMT
Metal
Last
Change Pct chg
Spot gold
1173.16
7.51
0.64 Spot silver
16
0.19
1.2 Spot platinum
1012.5
6.75
0.67 Spot palladium
686.75
3.75
0.55 Comex gold
1173.3
7.2
0.62 Comex silver
16
0.163
1.03
COMEX gold and silver contracts show the most active months