Precious metals extended the loss on Friday on Comex as dollar strengthened sharply against Euro after the comment from ECB president gave a hint they might cut interest rate by quarter basis points led to correction in precious metals.

The world's largest gold-backed exchange-traded fund, the SPDR Gold Trust, said holdings fell to 1,105.98 tonnes as of April 17, down 13.45 tonnes or 1.2 percent from the previous day. It was the biggest one-day decline since Oct. 3.

The dollar neared a one-month high against the euro with the single currency under selling pressure due to uncertainty over what policy steps the European Central Bank will take next.

ECB President Trichet signaled the bank's likely next move, saying it could cut its interest rate but only by an additional 25 basis points. Noncommercial net long positions in gold futures listed in New York rose to 129,895 lots as of April 14, up from 127,812 lots a week earlier, weekly report by the Commodity Futures Trading Commission showed.

Gold and silver both expected to trade sideways to down during the day. Strengthening dollar and equity markets might go gainst precious metals and we might see precious metals trading down during the day. If tonight’s leading indicators reports turn out to be better than expected then we might see further correction in precious metals.

We have seen that Gold has made a double bottom formation at $864/oz, breaching that we might see Gold prices even testing $850/oz.