BENGALURU, Aug 10 (Reuters) – Gold prices dipped in Asia on Friday, languishing near a one- year low, weighed down by a rally in the U.S. dollar amid heightened global political tensions. Spot gold shed 0.5 percent to $1,206.29 an ounce at 0618 GMT, hovering close to its one-year low of $1,204 hit last week. The metal was also on track to post a fifth weekly decline. U.S. gold futures were 0.5 percent lower at $1,213.4 an ounce.

“The strong dollar is effecting the price of gold. Despite heightened geopolitical tensions, gold bears are still in control of the price and pushing the bulls out of their boundary,” said Naeem Aslam, chief market analyst at The U.S. dollar, in which gold is priced, on Friday extended gains to hit a 13-month high against a basket of peers as European currencies such as the pound and euro continued to lose traction. Meanwhile, fresh U.S. sanctions against Moscow saw Russia’s rouble near a two-year low, while the Turkish lira plumned a record low in the wake of a diplomatic rift with the United States. Gold prices, which can gain during times of uncertainty, have largely failed to benefit from rising geopolitical tensions this year, as investors have chosen the safety of the dollar over the precious metal. Also adding pressure on gold were expectations for higher interest rates in the United States, where the Federal Reserve is expected to raise benchmark lending rates next month for the third time this year. The U.S. economy is performing “very well” with continued growth clearing the way for one or two more interest rate hikes in 2018, Chicago Federal Reserve Bank President Charles Evans said on Thursday in an interview in which he dismissed earlier worries about weak inflation. Higher U.S. rates tend to boost the dollar and Treasury yields, adding pressure on greenback-denominated, non-yielding bullion. “We expect gold prices to exhibit range-bound trading conditions for today with heavy downside potential looming large for the current term,” Benjamin Lu, a commodities analyst at Singapore-based broker Phillip Futures, said in a note. Spot gold looks neutral in a range of $1,206-$1,220 per ounce, and an escape could suggest a direction, Reuters technicals analyst Wang Tao said. In other metals, silver fell 0.6 percent to $15.32 an ounce. Platinum was down 0.4 percent at $827.20, while palladium lost nearly 1 percent at $899.10.

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