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Gold prices edged up on Friday before a long holiday weekend as data showed U.S. inflation was cooling, though not significantly enough for the Federal Reserve to slow down rate hikes.

Spot gold rose 0.2% to $1,796.53 per ounce by 2:22 p.m. ET (1922 GMT), while U.S. gold futures settled up 0.5% at $1,804.2.

Gold was up about 0.2% for the week, its best in three.

U.S. consumer spending, edged up 0.1% in November after climbing 0.4% in October, while inflation cooled further.

With inflation close to being in line with expectations, gold prices were higher on fresh speculative buying ahead of the new year on bets that the bigger funds might move to the long side of gold at the beginning of the year, said Jim Wyckoff, senior analyst at Kitco Metals.

Bullion prices dipped over 1% on Thursday after U.S. GDP data highlighted the country's economy rebounded faster than previously estimated, potentially setting the Fed on a keener path to fight inflation.

While gold is seen as an inflation hedge, rate hikes weigh on the non-interest bearing bullion.

Gold prices are on track for a second consecutive yearly decline, falling nearly 2%.

However, "you're going to see a better demand picture for the metals in 2023. Inflation could still be problematic, but central banks are going to, around mid-year, start to let off the gas and that's going to be supportive for the metals markets," Wyckoff highlighted.

Markets also kept a close tab on rising COVID-19 infections in top gold consumer China that could have an impact on physical buying. [GOL/AS]

Spot silver rose 0.6% to $23.70 per ounce, platinum jumped 4.3% to $1,019.72, and palladium was up 3.6% to $1,741.75. All three are set for weekly gains.

Platinum could be undervalued with the market climbing towards $1,200, said Frank Chaolly, senior market strategist at RJO.