Gold fell from one-month highs on Friday after Federal Reserve Chair Janet Yellen kept the door open to an increase in U.S. interest rates this year, sparking a dollar rally, while palladium was on track for its biggest weekly rise in almost four years.
Yellen said in a speech on Thursday that she expected the U.S. central bank to start raising rates later in 2015, as long as inflation remained stable and the U.S. economy was strong enough to boost employment.
Expectations for a rise in ultra-low rates, which have cut the opportunity cost of holding gold while weighing on the dollar, have helped push the metal down 5 percent this year.
Gold rallied after the Fed opted at its September policy meeting to keep rates on hold, hitting its highest since Aug. 25 on Thursday as dollar weakness prompted a wave of short covering. It has failed to maintain those gains, however.