Gold rally fades slightly amid Fed speeches

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Gold pared earlier gains in volatile trade amid speeches from U.S. Federal Reserve members.

Spot gold was last down 0.7 percent at $1,320.22 an ounce, after earlier rising 1.5 percent to $1,341.60.

U.S. gold futures for December delivery were down 0.1 percent at $1,323.30.

Federal Reserve Vice Chairman Stanley Fischer told CNBC on Friday the decision on whether to hike interest rates should be looking forward, not backward — and the next jobs report will figure into the process.

Earlier, gold extended gains above 1 percent on Friday, breaking a five-day streak lower after Federal Reserve Chair Janet Yellen said the case for raising U.S. interest rates has strengthened, although increases should be gradual.

Yellen pointed to improvements in the U.S. labor market and expectations for moderate economic growth, reinforcing the view that such a move could come later this year. She did not, however, lay out a clear roadmap for what the Fed needs to see to raise rates.

"After the initial Yellen headlined-induced stumble, gold has rallied impressively, helped by a weakening dollar," said Tai Wong, director of base and precious metals trading for BMO Capital Markets in New York.

"Short-term, holding support above $1,315 (an ounce) may let the recently listless gold bull convalesce in the familiar and safe $1,330-$1,360 range," he added.

The U.S. dollar index fell as much as 0.6 percent as Yellen spoke, but then pared losses to land up 0.74 percent.

Gold is highly sensitive to rising U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

Fed policymakers are seen as sharply divided over whether to increase rates soon or take a more cautious approach.

"Yellen's highly anticipated remarks at Jackson Hole had a hawkish tilt... although with the usual caveats that the timing will be based on how the data unfold," said Avery Shenfeld, chief economist for CIBC Capital Markets.

"Overall, there really is no big surprise here, so we can put the Fed hype aside for now."

The metal slid for the past five sessions, extending losses on Thursday after U.S. jobless and durable-goods data beat forecasts and Kansas City Fed President Esther George said it was time for the Fed to raise rates gradually.

The spot gold price hit a four-week low on Thursday of $1,317.46 an ounce.

Gold discounts in India hit near three-month lows this week, while buying gathered steam elsewhere in Asia as lower prices and festive buying lifted demand for the metal.

Silver was up 0.54 percent at $18.60 an ounce, after hitting an eight-week low of $18.46 on Thursday.

Platinum was nearly flat at $1,068.60, after falling to a 7-1/2-week low of $1,059.50. Palladium was also steady at $684.20.

— CNBC's Matthew J. Belvedere contributed to this report.