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Spot gold was down marginally at $1,259.16 per ounce, as of 0417 GMT, after jumping more than 1 percent in the previous session. The precious metal hit a high of $1,266.4 on Thursday, a level last seen on June26.

The bullion has gained about 1.7 percent so far this week, in what would be its second weekly gain in three.

U.S. gold futures declined 0.4 percent to $1,263.3 per ounce on Friday.

·         "A depreciating dollar coupled with expectations of fewer rate hikes in 2019 remain the primary factors supporting spot gold prices," said Lukman Otunuga, a research analyst with FXTM.

"The U.S. Federal Reserve's failure to reassure investors that they understand the risks across global markets is seen fuelling appetite for safe-haven gold in the short- to medium-term."

The Fed's commitment on Wednesday to retain the core of its plan to tighten monetary policy, despite rising uncertainty about global economic growth, rattled stock markets and pressured the dollar, making the U.S. currency-denominated gold more appealing for non-U.S. investors.

·         "Traders expect risk sentiment to remain on very wobbly conditions entering the new year," said Stephen Innes, APAC trading head at OANDA in Singapore.

The dollar's weakness against its Japanese peer has parked gold in "a perfect spot" for investors, Innes added.

·         Global stocks continued their slide on Friday as the threat of a U.S. government shutdown and of further hikes in U.S. borrowing costs fanned investor unease over the economic outlook.

·         U.S. President Donald Trump's refusal to sign a legislation to fund the government unless he gets money for a border wall, spooked investors, thus risking a partial federal shutdown on Saturday.

"With volatile equity markets accelerating the flight to safety, gold is likely to remain supported for the rest of 2018," FXTM's Otunuga said.

The end-2019 target for Capital Economics is $1,300 an ounce for gold, followed by the $1,400 level at the end of 2020.

“The past quarter marks a turnaround for the gold price and a sign of what is to come. Accordingly, we continue to expect gold to move higher next year – albeit by a modest $50 per ounce given the recent rally,” economists at Capital Economics wrote on Thursday.

·         Among other precious metals, palladium fell 0.3 percent to $1,260.50 per ounce, but was up 2 percent for the week in what would be its fourth consecutive weekly gain.

·         Silver fell 0.1 percent to $14.75 per ounce, but has gained 1 percent so far in the week.

·         Platinum fell 0.1 percent to $792.80 per ounce but was headed for its weekly gain for the first time in seven.