Gold prices could trade lower next week with the yellow metal having to contend with potential currency impacts, rising US bond yields, lower demand from China and incoming US economic data.
Traders will be tracking US Federal Reserve Chair Janet Yellen's biannual testimony to Congress, on 24-25 February. Her testimony could drive the US dollar higher, denting the demand for gold. A stronger greenback makes the metal more expensive for holders of other currencies
Economists at Nomura said the minutes from the January Federal Open Market Committee (FOMC) Meeting raised more questions about future US rate hikes.
They said in a note that "the apparent disagreements among FOMC participants heighten the importance of [Fed chief Yellen's] Congressional testimony..."
But Ole Hansen, head of commodity strategy at Saxo Bank, told Kitco News he was not expecting Yellen to reveal anything new about the US central bank's monetary policy and future rate hikes.
Hansen, however, said investors must track the US bond market as rising yields could drag gold lower next week. Lower yields buoy the gold market because it lowers the metal's opportunity costs, he added.
James Steel, commodity analyst at HSBC, said the lack of demand from China, the leading consumer of the precious metal, posed a risk for the gold market next week. The Chinese market is shut for the Lunar New Year holidays and will resume operations on 25 February
But Steel told Kitco that there was potential for gold to hold around the $1,200 level.
Avi Gilburt, independent trader at elliottwavetrader.net, said prices could retest November 2014's lows in the near-term.
Jamie Saettele, currency strategist at DailyFX, said he expects prices to continue to move lower in the short-term. The break below $1,235 on 10 February created renewed bearish momentum.
Saettele added that if $1,199.80 does not hold as support, then there was a good chance the price will test support at $1,172.
Saxo's Hansen said: "The Federal Reserve is at a critical point right now and I don't think she is going to want to stick her neck out. I think she wants to keep the boat as steady as possible."
DailyFX 's Saettele: "If we do test $1,172 then I think we could see a pretty good bounce but we have to get back to, I would say, $1,240 to shift the market's outlook."
Capital Economics said in a note: " Commodity markets are paying less attention to the risk that Greece might be forced out of the euro-zone. Most investors still view "Grexit" as unlikely, or at least have confidence in the ability of policy-makers to limit contagion if it does happen. "Grexit" may not be imminent, but these views seem complacent to us.
"Thinking about the impact on commodities, the initial turmoil caused by 'Grexit' would surely boost safe-haven demand for gold while undermining the prices of assets perceived to be riskier, including oil and industrial metals. But once the dust has settled, the break-up of a flawed monetary union might be the best outcome.
"It could provide the least painful solutions to debt and competitiveness problems, allow policy to be loosened across the region and ultimately prove to be a positive for economic activity. In time, this should be reflected in the prices of industrial commodities too."
US gold futures settled $2.70 lower to $1,204.90 an ounce on 20 February.
Prices lost $22.60 or 1.84% for the week as a whole, their fifth straight weekly loss, on news that eurozone and Greek officials had struck an agreement to extend Greece's bailout by four months.