Gold has fallen more than 1 per cent, after investors encouraged by recent stimulus measures by central banks pushed prices to the highest level in nearly seven months in the previous session.

But market participants remain bullish on the precious metal, which tends to benefit from easy monetary policy.

"I wouldn't be surprised to see gold pull back to the $1750 area and dips will continue to be bought," said a Singapore-based trader.

Spot gold fell as much as 1.3 per cent to $US1759.14 an ounce, down from $US1787.20 hit in the previous session, its highest since Feb. 29. Gold gained 0.6 per cent last week in its fifth consecutive week of rises.

US gold dropped 0.8 per cent to $US1763.40.

A stronger US dollar also weighed on prices of commodities priced in the greenback, making them less attractive to buyers holding other currencies.

Other precious metals also weakened. Spot platinum dropped 2 per cent to $US1603.5 an ounce and spot silver fell 1.9 per cent to $US33.78.

Investors piled into gold after the US Federal Reserve announced a fresh round of quantitative easing earlier this month. Speculators raised their net long positions in US gold futures and options to 178,426 contracts in the week ended Sept. 18, the highest level in nearly seven months.

Holdings in the SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, had climbed to 1317.762 tonnes by Sept 21, its highest level since July 2010.

In Europe, Spain is considering freezing pensions and speeding up a planned rise in the retirement age as it races to cut spending and meet conditions of an expected international sovereign aid package, sources with knowledge of the matter said.

European Union paymaster Germany said on Friday that Spain does not need a European bailout, dousing financial market expectations that Madrid will gain early relief from European Central Bank bond-buying.

Reuters