Gold fell on Friday and was bound for a second straight weekly drop on cooling safe-haven demand and hawkish cues from Federal Reserve Chair Jerome Powell.
Autocatalyst palladium, meanwhile, extended its slump en route to its worst week in more than 15 months, hurt by excess stocks amid wider adoption of electric vehicles while automakers switch to cheaper platinum.
Spot gold was 0.7% lower at $1,944.10 per ounce by 1312 GMT after hitting its lowest since Oct. 18. U.S. gold futures fell 1% to $1,950.00.
Silver fell 0.4% to $22.53.
"Investor appetite for gold has been hit by easing fears over the Middle East tensions spilling over to wider regions and hawkish comments by Jerome Powell," FXTM senior research analyst Lukman Otunuga said.
Gold has lost more than $50 since hitting $2,000 levels last week on escalating tensions in the Middle East. Prices are down 2.4% so far this week.
Denting market expectations of a peak in U.S. interest rates, Fed officials, including Powell, said on Thursday they still aren't sure that rates are high enough to conclude the battle with inflation.
Following Powell's comments, the benchmark 10-year U.S. Treasury yield rose, making non-yielding bullion less attractive for investors.
The dollar index was heading for its biggest weekly gain in two months, making gold more expensive for overseas buyers.
"Any U-turn on monetary policy from the U.S. central bank along with dovish remarks could lift prices. Geopolitical tensions could be another bullish catalyst," said Carlo Alberto De Casa, market analyst at Kinesis Money.
Platinum fell 1.1% to $850.03, bound for its worst week since mid-2021. Palladium slipped 3.9% to $953.58 per ounce. Both metals are used by car makers in devices to reduce engine emissions.
(Reporting by Harshit Verma in Bengaluru, Editing by Peter Graff, Kirsten Donovan)