Gold futures have fallen as a record-breaking rally in US stocks sapped investor demand for haven assets.
Gold for April delivery, the most active contract, on Friday closed down $US10.20, or 0.8 per cent, at $US1,321.60 a troy ounce on the Comex division of the New York Mercantile Exchange.
Still, gold prices rose 6.6 per cent in February and are up 9.9 per cent since the start of 2014 as the market recovers from its worst year since 1981.
Investors have been tiptoeing back into gold in recent weeks amid doubts about the health of the US economy as well as concerns about financial stability in emerging markets such as Argentina, Turkey and Ukraine. Gold is generally seen as a haven asset. On Friday, some traders who had benefited from gold's rebound chose to lock in gains by reducing their holdings.
"The rally was played out, so we're just seeing people take profits," said Frank Lesh, a broker and futures analyst with FuturePath Trading.
Lesh said that uncertainty over US monetary policy, following Federal Reserve Chairwoman Janet Yellen's congressional testimony on Thursday, added to the pressure on gold. While bullish investors focused on Yellen's willingness to pause stimulus reduction if economic data worsened, bearish traders instead highlighted the fact that the Fed chief expects to end asset purchases this year, he said.
US equities extended their record-breaking run Friday, with the S&P 500 touching an intraday all-time high of 1867.95. The stock market's stellar performance had lured many investors away from gold in 2013.
Gold and stocks tend to move in opposite directions as equities are considered a riskier asset than precious metals.
Friday's rally in equities offset the impact of a weaker US dollar. The euro rose to its strongest level this year against the dollar after euro-zone inflation readings came in higher than expected, taking pressure off the European Central Bank to cut interest rates at its policy meeting next week.
Gold is traded in US dollars and becomes less expensive for investors who use other currencies when the greenback weakens.
Settlements (ranges include open-outcry and electronic trading):
London PM Gold Fix: $US1,326.50; previous PM $US1,332.25
Apr gold $US1,321.60, down $US10.20; Range $US1,319.30-$US1,333.60
May silver $US21.241, down 11.1 cents; Range $US21.105-$US21.430
Apr platinum $US1,446.80, down $US6.60; Range $US1,441.10-$US1,456.80
Jun palladium $US744.45, up 60 cents; Range $US740.80-$US747.50
