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Gold prices eased on Friday and were poised for a fifth straight weekly loss, as expectations of a sizeable rate hike by the U.S. Federal Reserve powered the dollar and eroded bullion's appeal.

Spot gold firmed to $1,708.19 per ounce by 1254 GMT, but has lost about 2% so far this week. U.S. gold futures also eased 0.1% to $1,704.90.

The dollar held at a two-decade high, making bullion more expensive for overseas investors. [USD/]

Gold looks to be in a free fall, and typically buyers will restrain themselves until the price finds some decent support, said independent analyst Ross Norman.

With the U.S. dollar undergoing an epic rally, it's apparent that investors see it as the 'go-to' safe-haven asset, Norman said, adding, there's "some significant redemptions in the gold ETF on a daily basis as stale institutional longs liquidate." [GOL/ETF]

Two of the Fed's most hawkish policymakers said on Thursday they favoured another 75-basis-point interest rate increase this month.

Meanwhile, U.S. retail sales increased more than expected June.

There are chances of a slight bounce back in prices as long as the stiff support of $1,670 holds the downside, said Hareesh V, head of commodity research at Geojit Financial Services, adding that the critical event, however, would be the next FOMC meeting.

Higher interest rates raise the opportunity cost of holding non-yielding bullion.

The market also took stock of the EU's plans to adopt its seventh package of sanctions against Russia, which will add a ban on imports of Russian gold.

"The EU sanctions against Russian gold will have rather limited impact. I think this move is more of a gesture. Likely the Russians will be able to find buyers outside the EU quite satisfactorily," Norman said.

In the physical gold market, buyers in some Asian hubs were drawn to a dip in prices. [GOL/AS]

Spot silver rose 1.2% to $18.60 per ounce, but was headed for a weekly decline.

Platinum climbed 0.3% to $846.12, while palladium fell 2.4% to $1,851.75.