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Gold prices edged up on Friday and were set for small weekly gains, as investors awaited the U.S. Federal Reserve's policy meeting for hints of a possible easing in its aggressive monetary policy tightening.

Spot gold rose 0.1% to $1,664.24 per ounce, as of 0344 GMT and was up 0.4% for the week.

U.S. gold futures were 0.1% higher at $1,667.70.

"The softer dollar and lower yields have certainly helped gold to drag itself from its lows, but that's no reason to be overly bullish on gold just yet," said City Index analyst Matt Simpson.

The dollar index was down 0.2%, and has lost more than 1% for the week on hopes of a potential Fed pivot. The benchmark 10-year Treasury yields held below the 4% threshold.

Data from the Commerce Department showed third-quarter consumer spending slowed to 1.4%.

While the Fed is likely to announce another 75 basis-point (bp) rate hike at its meeting next week, traders are expecting a half-point increase in December.

The Fed's sharp rate hikes since March have driven gold down 9% this year so far, as it increases the opportunity cost of holding zero-yielding bullion, while boosting the dollar.

"Gold is in for a better year in 2023 as the Fed pivot will have to arrive at some point... And the chickens may come home to roost as economies falter in a high-interest environment, so gold could glean from safe-haven demand," Simpson added.

The European Central Bank raised interest rates by 75 bps on Thursday but said "substantial" progress had already been made in its bid to fight soaring inflation.

Spot silver eased 0.1% to $19.56 per ounce.

Platinum rose 0.4% to $963.21 and was up 3.5% for the week. Palladium gained 0.7% to $1,954.10 but was bound for a more than 3% weekly drop