NEW YORK, June 23: Gold futures in New York eased on Friday, though prices pared an earlier hefty fall, pressured by a firm dollar before next week's decision on US interest rates by the Federal Reserve.

Market players appeared to be booking profits from gold's rally in the last week also due to a softer oil price, which dulled the allure of gold as an inflation hedge.

Gold for August delivery was off $1.90 at $583.50 an ounce by 10:20 a.m. EDT on the New York Mercantile Exchange's COMEX division, dealing from $588.50 to $574.50.

A New York broker said options-based buying had given gold a boost by midmorning after the fierce speculative selling seen earlier, in thin trading that exaggerated price moves.

The washout earlier in gold was very traumatic, we were down $11 and now we're only down a buck, he said.

But the key words here today are 'illiquid markets', and this was a shakeout of weak positions. Dealers viewed gold futures as hemmed in a range between support down near $550 to $540 and resistance at $600.

Gold futures fell almost as low as $546 last week — a three-month low -- before recovering. In mid-May, gold rose as high as $732 an ounce, its loftiest since 1980.—Reuters