Gold prices eased on Friday after soaring 5 percent the previous day, pressured by profit-taking after the biggest rally in more than seven years, but the metal was still set for its best week in four years as investors rushed to safe haven assets.
Spot gold gold was down 0.67 percent at $1,238.19 an ounce, but has risen 5.5 percent this week, on track for the fourth straight week higher and the biggest weekly gain since October 2011. On Thursday, it surged 5.3 percent to a one-year high at $1,260.60.
U.S. gold futures for April delivery settled down 0.7 percent at $1,239.40 an ounce but were on track to rise 7.1 percent this week, the sharpest increase since December 2008.
"Today you've got a little bit of a corrective pull back. There's some profit taking going on," said Bob Haberkorn, senior market strategist at RJO Futures in Chicago.
"Traders are catching their breath and re-evaluating what to do at this stage," said Haberkorn, who also indicated he expected to see another leg up after a bit more consolidation.
Investors said gold's prospects for a sustained price rally are better than they have been for years.
"Gold could test $1,260 or even $1,300 in the next few weeks, but I wouldn't be surprised if we also see some profit-taking," said Commerzbank analyst Carsten Fritsch.
U.S. and European shares rebounded, with reassuring U.S. retail sales data boosting sentiment, while the U.S. dollar also rose, pressuring gold prices.
Bullion investors have been unnerved since the Bank of Japan, followed by Sweden this week, introduced negative interest rates to stimulate growth.
Gold has also been boosted by a scaling back of expectations for U.S. interest rate rises and even the possibility of rate cuts if economic conditions deteriorate.
On Friday, however, New York Fed President William Dudley said it is "extraordinarily premature" to even talk about using negative interest rates to stimulate the economy.
SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 2 percent on Thursday, the biggest daily inflow since Dec. 18.
Silver was down 0.2 percent at $15.71 an ounce, slipping from a $15.95 three-month high touched on Thursday.
Platinum dipped 0.3 percent to $953.50 an ounce after reaching its highest since November on Thursday. Palladium was up 0.3 percent at $522.80.