Spot gold lost as much as 1.7 percent to $1,385.77 an ounce, and recovered slightly to $1,389.17 by 0401 GMT.
Spot silver XAG= fell more than three percent to $26.62 an ounce, and was trading at $26.86.
"Everyone is watching the G20, and gold is chasing the dollar," said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong, "We can see some consolidation from
here, in a range of $40 dollars below $1,420."
Metals, grains and oil sold off broadly on Friday on worries about a possible new round of Chinese monetary tightening, a weaker euro and the temptation to cash in on
Chinese consumer price inflation rose a faster than expected 4.4 percent in October, a 25-month high.
"The rumor that China will raise interest rates has been circulating this week," said Sun Lei, a metals analyst at Galaxy Futures in Beijing.
Also weighing on gold was strength in the dollar spurred by concern that euro zone nation Ireland may need to tap a special fund in the face of mounting borrowing costs.
The dollar rose to a five-week high against a basket of currencies .DXY, as the euro hit six-week lows on the dollar on Friday.
"If the inverse correlation between the dollar and gold strengthens, we can see the dollar weigh on gold again," said Ong Yi Ling, an analyst at Phillip Futures.
Some investors were selling off to lock in profit ahead of the holiday season, after gold prices have risen nearly 18 percent in the past three months. But the fall is unlikely to be sharp.
"I think gold will find a base soon, as there is some physical buying at this level," said a Singapore-based trader, expecting the support level at $1,390.
The G20 will agree to setting vague "indicative guidelines" for measuring global imbalances and hammer out the details next year, G20 sources said on Friday, effectively calling a timeout
to let tempers cool after heated debate over currencies.
Platinum group metals also fell sharply, with platinum XPT= falling 2.5 percent to a one-week low of $1,707.75 and palladium down nearly 3 percent to $689.5.
Industrial metals also fell broadly, with Shanghai copper and zinc futures touching daily downside limits and London copper slip over two percent.