Gold slips 1.3 pct as dollar climbs on ECB move

Gold fell as much as 1.3 percent on Friday as the dollar rose and markets digested the mixed implications of a European Central Bank plan to pump about one trillion euros into the euro zone's flagging economy.
The metal, often seen as a hedge against inflation, jumped more than 1 percent above $1,300 an ounce on Thursday after the ECB announcement.
But with the euro hitting an 11-year low against the dollar , gold prices pared some of those gains as investors focused on the impact of the stronger U.S. currency, which makes dollar-denominated assets more expensive for investors holding other currencies.
"Gold was completely dislocated from the dollar yesterday, meaning that euro-gold is the best performing commodity this year, helping dollar gold stay fairly stable around $1,300," Saxo Bank's Ole Hansen said.
"But that strength in the dollar is now proving too much."
Spot gold dropped to a session low of $1,284.26 an ounce and was down 0.8 percent at $1,291.20 by 2:48 p.m. EST (1948 GMT). Bullion peaked at $1,306.20 on Thursday, its highest since Aug. 15, and was still headed for a third straight weekly gain.
U.S. gold futures closed down $8.10 at $1,292.60 an ounce, in what traders called a "pull-back" session as the market consolidated.
The dollar rose by up to 1.4 percent against a basket of six other major currencies, mostly due to euro weakness, while European shares had their biggest two-week rally in five years.
Euro-priced gold hit its highest since April 2013 at 1,167.60 euros an ounce.
Goldman Sachs in a report seen by Reuters on Friday raised its 2015 gold price forecast to $1,262 per ounce from $1,200. [ID;nL1N0V21OI]
Traders are likely to turn to Sunday's election in Greece and next week's Federal Open Market Committee policy meeting for clues on the wider economic environment and when U.S. interest rates might rise.
The Fed is expected to repeat that global risks have yet to throw the U.S. recovery or its rate-hike plans off track despite the growing number of central banks cutting rates and ramping up stimulus.
"People are coming to the conclusion that while the ECB is getting more expansionary, the Fed may be forced to be less restrictive because of the headwinds to inflation from the drop in oil prices, which can trigger some delay in interest rate hikes and would be positive for gold," Julius Baer analyst Carsten Menke said.
Among other precious metals, spot silver was down 0.2 percent at $18.25 an ounce. Palladium lost 0.1 percent to $771.20 an ounce, while platinum fell 1.3 percent to $1,264 an ounce.