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The dollar rose about 1 percent against the yen on Friday, after Bloomberg reported that the Bank of Japan was considering applying negative rates to its lending programme for financial institutions. A stronger greenback makes the dollar-denominated precious metals expensive.

Gold fell 0.3 percent to $1,244.80 an ounce by 0719 GMT, after hitting a five-week high of $1,270.10an ounce on Thursday. Spot silver was up 0.4 percent at $17.065 an ounce, after earlier climbing as much as 1 percent. It had risen to a 11-month high of $17.695 in the previous session.

Silver is up 5.4 percent for the week, while gold is up 1 percent.

But Goldman Sachs maintained its bearish view on gold and other commodities on Friday, and reiterated its recommendation to short gold.

"We continue to expect that the strengthening of the U.S. labour market will force the Fed to hike rates three times this year, which will lead to a stronger dollar and a gradual increase in U.S. real rates, pushing gold down," Goldman analysts said in a note.

HSBC analyst James Steel said the gold and silver rallies could be running into headwinds. "For silver, we favour the market above $17, but expect volatility and further gains may be hard to hold. On the positive side, it appears that solar-panel demand is up and retail demand is solid for silver," Steel said, adding that gold may need to consolidate around $1,250 before moving higher.

Chirag Mehta, Senior Fund Manager for Alternative Investments at Quantum Mutual Fund said This again will neither lift spending nor investments but has a potential to spark a rush to real assets like gold. Gold has seen a good up in the last quarter. Consolidation is normal and healthy after a move like we saw. Any improvement in risk sentiment may also reduce flows to gold. However, given the global macro, downsides in gold would be limited and likely to attract significant buying on any meaningful pullbacks. Fundamentally, gold seems to be on a solid footing as central bankers have again hit the wall.

Gold should benefit as central bankers attempt further measures through more newer, unconventional and untested approaches to revive growth. Given the uncertain macroeconomic backdrop, gold will be a useful portfolio diversification tool and thereby helping you to reduce overall portfolio risk.

Gold and silver have more or less confirmed they have bottomed and are ready for a multi-year rally. Their trend has not fully ‘reversed’ to the upside yet but the market breadth and internals for the precious metals sector are very bullish.

Reference: Economic Times, Commodity Online, Reuters