Investing.com - Gold prices headed lower on Friday as a rebound in the dollar put downward pressure on the precious metal.

Comex gold futures fell $10.60, or around 0.8%, at $1,338.20 a troy ounce by 10:26AM ET (14:26GMT).

With geopolitical tensions fading into the background, a 0.6% rise in the U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was enough to spark pressure on the dollar-denominated commodity that becomes more expensive for holders of foreign currency and thus decreases demand.

Still, gold has been trading in a tight range was on track for weekly losses of just around 0.7%, while maintaining gains of 1.5% so far this year.

With no major economic data on Friday’s agenda, market participants will continue to look for clues on monetary policy from Federal Reserve members.

Cleveland Fed president Loretta Mester reiterated her view that the central bank should forge ahead with plans to gradually reduce policy accommodation.

“If the economy evolves as I anticipate, I believe further gradual increases in interest rates will be appropriate this year and next year,” she remarked on Thursday evening.

In a repetition of remarks made earlier in the week, Chicago Fed president Charles Evans said on Friday that he saw no signs of an outbreak in inflation.

“As long as this picture continues, the FOMC can increase rates gradually while monitoring any rising inflationary pressures,” he said.

San Francisco Fed chief John Williams will make an appearance at 11:15AM ET (15:15GMT).

Markets have largely priced in that the Fed will hike rates twice more this year. Fed fund futures put the odds of the next rate hike coming in June at around 100%, according to Investing.com’s Fed Rate Monitor Tool.

The probability of another increase in December was seen at about 88%. Although the possibility of a total of four interest rate hikes this year remains below the 50% threshold, odds have ticked up to about 42% compared to just about 35% last week.

Higher interest rates tend to weigh on demand for gold, which doesn’t bear interest, in favor of yield-bearing investments.

In other metals trading, silver futures lost 12.9 cents, or 0.7%, at $17.110 a troy ounce by 10:29AM ET (14:29GMT).

Palladium futures traded down 0.5% to $1,021.55 an ounce. Sister metal platinum slid 1.0% at $930.30.

In base metals, copper traded up 0.1% to $3.135 a pound.