Federal Reserve tightening looks likely to remain a strong headwind for gold in the coming week after the precious metal tumbled on Friday to mark the lowest settlement since December, well below the psychologically important $1,300 level.

The diverging monetary policy outlook between the Federal Reserve and the European Central Bank is likely to underpin dollar demand. A stronger U.S. currency makes gold and other dollar-denominated commodities more expensive for holders of other currencies.

Gold futures for August delivery settled down $26.20 or 2.00% at $1,282.10 on the Comex division of the New York Mercantile Exchange. For the week, prices were down 1.81%.

Despite some risk aversion in markets on Friday as a trade spat between the U.S. and China escalated, precious metals traders focused on a rally in the dollar index which reached an eleven-month high, before easing slightly in late trade.

The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, rose to 95.13, a level not seen since July 2017, before pulling back to 94.80 late Friday. For the week, the index was up 1.33%, its best weekly performance in seven weeks.

Demand for the dollar was boosted after a more hawkish sounding Federal Reserve raised interest rates for the second time this year on Wednesday and indicated that it now sees two more rate increases before the years end.

Expectations for higher interest rates tend to be bearish for gold, which struggles to compete with yield-bearing assets when rates rise.

A day later the European Central Bank outlined plans to wind up its massive asset purchase program by December, but also pledged to keep interest rates unchanged until at least the middle of 2019.

The move saw the euro post its largest one day loss against the dollar since 2016, with EUR/USD tumbling 1.88%.