Gold briefly got closer to $600 an ounce after hitting a 25-year high on Friday, but it erased gains in late trading as a rally in the dollar and softer oil prices prompted some investors to book profits.
Silver also climbed to new highs not seen in more than 22 years before a light sell-off weighed on the gray metal.
Gold prices fell as much as 2.2 percent from an intra-day high of $598 and were quoted at $588.00/588.90 an ounce, down from $594.80/595.70 in New York late on Thursday.
"What you're seeing at the moment is a correction. It's the end of the week and people are taking some profit," said Michael Widmer, precious metals analyst at Macquarie Bank.
"There is nothing to worry about yet. There is still a lot of money waiting to flow into the sector and I believe we can have further price rises," he said.
Gold has jumped 7 percent since the start of last week, about 16 percent this year and over 40 percent in the past 12 months. Assets such as equities and bonds have lagged behind.
The Standard and Poor's 500 index, an indicator of US equity performance, has risen about 11 percent in a year.
Dealers said gold had paused for a breather and would soon gather steam to breach the $600 mark.
Growing investor interest following instability in the dollar, inflation worries, tension in the Middle East and speculation that central banks would diversify into metals have boosted gold's allure, they said.
"A lot of short-term funds have been shifting heavily into gold and other commodities since the start of the new quarter," said Akira Doi, director at Daiichi Commodities Co Ltd.
Fund operators who invest over the short term have flocked into gold given the dollar's recent fall against the euro and as oil extended this week's big gains.
But on Friday oil eased and the dollar rose after news that US job creation in March was roughly in line with forecasts.
A stronger dollar makes gold costlier for holders of other currencies and reduces demand, while the metal is traditionally seen as a hedge against inflation when energy prices rise.
"Any pullback in prices should see strong support at the $575 region," Standard Bank said in a report.
Geopolitical worries have prompted funds to buy gold, especially after Iran said this week it had successfully tested a "flying boat" and the land-to-sea Kowsar missile.
Silver has been buoyant on hopes for a launch of its first exchange-traded fund. Spot metal rose to $12.19 an ounce, but later dropped to $12.06/12.09, vs. $12.04/12.07 previously in New York.
Platinum dipped to $1,065/1,070 an ounce from $1,082/1,086, while palladium fell to $347/351 an ounce from $353/357 late Thursday.
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