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Gold was set for its biggest weekly decline since mid-November despite a recovery on Friday, after the U.S. Federal Reserve indicated more interest rate hikes were needed to curb inflation.

Spot gold rose 0.8% to $1,791.59 per ounce by 1:50 p.m. ET (1850 GMT), but has lost about 0.3% this week.

U.S. gold futures settled 0.7% higher at $1,800.20.

"A lot of traders are focusing on both the Fed and ECB, which signalled more tightening, and we've seen global bond yields rise significantly, and that's why gold is having a down week," said Edward Moya, senior analyst with OANDA.

The Fed on Wednesday raised interest rates by 50 basis points as expected, and Chair Jerome Powell said the U.S. central bank would deliver more hikes next year, despite growing recession worries. The European Central Bank and the Bank of England signalled similar rate-hike strategies.

Gold is considered a hedge against inflation, but rate hikes raise the opportunity cost of holding the non-yielding bullion.

Prices were firmer on Friday on a corrective bounce from strong selling pressure in the previous session, Jim Wyckoff, senior analyst at Kitco Metals said in a note.

"Gold may be getting a mild safe-haven bid as the U.S. and global stock markets are selling off in the wake of still-hawkish major central banks." [MKTS/GLOB] [.N]

Commerzbank sees gold falling back towards $1,750 per ounce until it is clear that the Fed's cycle of interest rate hikes is over, and expects prices to rise to $1,850 by the end of 2023.

Spot silver was up 0.4% at $23.14 per ounce, but down about 1.3% so far this week.

Platinum lost 1.4% to $992.43. Palladium dropped 4.3% to $1,713.81 after falling more than 8% in the previous session, and was headed for its biggest weekly drop in five months.