Spot gold was down 1 percent at $1,221.61 an ounce at 2:06 p.m. EST (1906 GMT), after falling as much as 1.9 percent. For the month, however, it was headed for gains of more than 9 percent, the biggest since January 2012, after safe-haven buying lifted prices to a one-year high on Feb. 11.
U.S. April gold futures settled down 1.5 percent at $1,220.40 an ounce.
"The increase in price this year has been supported by physical purchases, very strong in the funds and concerns are more global in nature, with increasing probability that there will be a recession in the U.S.," Julius Baer analyst Warren Kreyzig said.
Concerns that a slowing global economy could eventually push the United States into recession eased as data showed U.S. economic growth slowed less than expected in the fourth quarter.
"The GDP data came out better than expected, so it gives strength to the rate debate. If rates go higher, gold goes lower," said Bob Haberkorn, senior market strategist at RJO Futures in Chicago.
Despite Friday`s losses, gold has rediscovered its role as a shelter for risk-averse investors. Assets of SPDR Gold Trust , the top bullion exchange-traded fund, held steady on Thursday, after rising to their highest since March 2015 on Wednesday.
Gold funds accumulated their largest inflows since 2009 in the last week as financial market turmoil continued to unnerve investors, Bank of America Merrill Lynch said.
"While prices could fall back a bit if, as we expect, the Fed hikes rates later in the year, strong buying from both consumers and central banks in emerging economies, coupled with supply cuts, should offer solid support," Capital Economics said in a research note.
Gold prices have developed a bullish technical formation called the `golden cross,` where the 50-day moving average goes above the 200-day moving average.
Spot platinum dropped 1.9 percent to $908.50 an ounce, the lowest in nearly three weeks, while silver fell 3 percent to $14.68 an ounce, a three-week low. Palladium fell 1.1 percent to $477.75 an ounce, the lowest since Jan. 13.
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