Gold prices decline under pressure from the dollar growth and the lack of consensus among European leaders on measures to combat the debt crisis.

Italy posted a bond with a two-year maturity for the entire amount of the planned EUR 10 billion at a record yield of 7.814 percent per annum. At the talks the leaders of Germany, France and Italy on Thursday, German Chancellor Angela Merkel continued to resist the release of single Eurozone bonds and strengthen the role of the European Central Bank to combat the crisis.

Against this backdrop, the euro fell to nearly two-month low against the dollar and yen.Strengthening of the dollar had a negative impact on physical demand in India - the world's largest gold market - as the price of gold in rupees rose to almost record levels.

Stocks Funds ETF backed by gold this week rose by more than 300,000 ounces to a historic high 69.978 million ounces. According to UBS, in October, increased purchases of gold by central banks, which in the past year for the first time in 20 years bought more gold than was sold.

December futures for gold on Comex in New York fell to 1672.60 dollars per troy ounce.