Gold prices slipped on Friday but remained within sight of a 10-week high, with dealers watching movements in the dollar for short-term direction. A further weakness in the currency, which hovered near record lows against the euro, might lift gold to new highs but a recovery in the dollar might prompt profit-taking and push the metal towards $640 an ounce, dealers said. "I am cautious as recent gains have been made purely on a dollar weakness. The price movement is not artificial, but too much dependence on one factor is not healthy," said Matthew Turner, precious metals analyst at Virtual Metals. "Gold will be driven by the dollar, but if the currency doesn't move, then it might come back on profit taking." Gold eased to $676.40/677.05 an ounce from $677.30/678.10 late in New York on Thursday, when it rallied to as high as $677.50 an ounce on a weaker dollar. The dollar hovered near a record low against the euro on lingering worries about the U.S. housing market. The U.S. currency limped after Federal Reserve Chairman Ben Bernanke on Thursday said losses on subprime loans could hit $100 billion and threaten consumer spending. A weaker dollar makes gold cheaper for other currency holders and often lifts bullion demand. The metal is also generally seen as a hedge against oil-led inflation. "While gold has not been racing higher, the metal has still notched up steady gains this week, which should continue in the week ahead as both oil and the dollar look set to continue their recent trends," said James Moore, analyst at TheBullionDesk.com.