LONDON: Gold fell on Friday, snapping a seven-day rally as the dollar steadied and investors remained cautious ahead of comments from Federal Reserve Chair Janet Yellen, but the metal still looked set to post its second straight weekly gain.

Yellen's speech was scheduled at 1945 GMT and traders will be listening for clues on when the Fed may begin tightening monetary policy.

"Yellen ... has been accused of being too dovish and maybe she wants to react to that by making her speech sound a little bit less dovish," Saxo Bank senior manager Ole Hansen said.

At separate events on Thursday, the presidents of the St. Louis Fed and Atlanta Fed said an adjustment away from ultra-loose monetary policy might be needed in light of the US economy's improvement since the 2007-2009 financial crisis.

Spot gold eased 0.5 percent to $1,197.70 an ounce by 1524 GMT. The metal jumped 2 percent on Thursday to its highest since March 2 at $1,219.40 in reaction to tensions in the Middle East.

US gold futures for April delivery fell $7.90 to $1,196.70 an ounce.

"Geopolitics has never been something that could set a trend in gold prices, it only causes a short-term deviation from the existing trend," Julius Baer head of commodity research Norbert Ruecker said.

Despite Friday's losses, gold was on track to finish the week up around 1.3 percent after its seven-day rally, the metal's longest winning stretch since August 2012.

Gold had gained strength after the Fed sounded cautious at its policy meeting last week about the pace of an interest rate increase, prompting the dollar to fall from multi-year highs.

An aggressive rate-rise path could hurt demand for gold, a non-interest-paying asset.

Investor caution over the price rally was evident as SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, continued to post outflows. Holdings fell nearly 6 tonnes on Thursday to 737.24 tons, the lowest level since January.

Physical demand across Asia slowed this week as the long rally in prices discouraged buyers.

Palladium lost 3 percent to a two-month low of $743.47 an ounce, while platinum was down 1.2 percent at $1,139.99 an ounce and silver fell 0.6 percent to $16.97 an ounce.