Gold slipped on Friday, on course for a second straight week of losses, as a weaker euro sapped appetite for bullion amid the uncertainties in Europe.

Gold briefly moved in tandem with the dollar in the previous session as safe-haven appetite overflowed from the greenback and U.S. Treasuries, but it quickly came to an end as Asian investors started the day fretting over the euro zone situation.

"It's an extension of the fear trade," said Nick Trevethan, senior metals strategist at ANZ in Singapore.

"With big euro zone risk bubbling just below surface and occasionally rising to a popping force, people are just uncomfortable holding risk, even gold. All and all, bears are back in the woods again."

Spot gold lost nearly half a percent to $1,555.46 an ounce by 0325 GMT, after finishing May with a 6.3 percent decline, the steepest monthly fall since December. It was headed for a 1.2-percent weekly loss.

Gold had fallen nearly 20 percent from its peak of $1,920.30 hit last September, flirting near the edge of a technical bear market. The most-active U.S. gold futures contract for August delivery dropped 0.4 percent to $1,556.90.

Gold prices were also pressured by a weaker euro.

The euro dropped to its lowest level against the dollar in nearly two years, dogged by worries that Spain may need external aid to shore up its struggling banking sector and fix its public finances.

Senior officials from the European Central Bank and European Union warned that the single currency bloc could fall apart without stronger crisis-fighting tools.

Investors are now eyeing an all-important U.S. employment report due later in the day, after Thursday's data showed a weakening job market, slower factory activity and softer-than-expected economic growth in the first quarter.

More disappointing data could fuel risk aversion, but weak data could also rekindle speculation of further monetary easing and lend support to bullion, which benefits from a low interest rate environment. – Reuters