NEW YORK- Gold set a fresh 2012 low on Friday as investor demand for the dollar and mild U.S. inflation left less interest in the precious metal as an alternative asset.

The most actively traded gold contract, for June delivery, fell $11.50, or 0.7%, to settle at $1,584 a troy ounce on the Comex division of the New York Mercantile Exchange, the lowest settlement since Dec. 30.

Gold fell 3.7% on the week, and has retreated in eight of the last 10 trading sessions, as worries about Europe’s debt crisis sent investors seeking safety into the U.S. dollar.

Some investors buy gold as a hedge against a weakening dollar, and the currency’s recent rally has bashed precious metals. The ICE US Dollar Index on Friday touched its highest point since mid-March.

Gold’s losses on Friday also came as a reading on U.S. inflation came in at its lowest level in more than two years in April, limiting demand for the metal as a hedge against rising prices. A similar reading in China, on consumer prices, also fell during the month.

“I don’t see a lot of buying coming in” to the gold market, said Jimmy Tintle, market analyst with GreenKey Alternative Asset Services. “You don’t see a lot of inflationary concerns.”

Gold’s declines this week began on euro-zone worries as political upheaval gripped the currency union after elections held last weekend.

Greek political parties struggled to form a coalition government, raising the prospect that the country could fail to secure its next round of international financial support or perhaps leave the euro zone. In France, along with Germany a leader in Europe’s response to its sovereign debt struggles, the left-leaning challenger triumphed in Sunday’s presidential election. And Spain’s government was forced to take steps to shore up its rattled banking sector.

While gold can rise as investors seek a safe harbor from economic turmoil, the metal has recently traded in step with perceived risky assets when European debt worries were making headlines. Amid the chance of a European financial freeze, some have favored holding the flexibility of cash instead of precious metals futures.

“There are naturally quite a number of questions surrounding the yellow metal’s near- and medium-term fate,” Kitco Metals analyst Jon Nadler said in a note. “There is little in the way of chart support for gold until the $1,527 level is touched and such an excursion could take place in short order.”