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Gold prices rose on Friday, helped by a slight dip in the U.S. dollar and growing geopolitical tension, but remained on track for a weekly decline as markets awaited key U.S. data for further insights into the Federal Reserve's monetary policy direction.

Spot gold rose 0.7% to $2,660.03 per ounce, as of 0236 GMT. However, bullion was down 2% so far this week.

U.S. gold futures gained 0.8% to $2,659.70.

The dollar index eased 0.2, boosting gold's appeal for holders of other currencies. [USD/]

The escalating geopolitical tensions are making investors flock to gold in the hopes of capitalising on the potential price increases, said Brian Lan, managing director at Singapore-based dealer GoldSilver Central, adding, "The slight weakening of the dollar has helped gold prices to gain."

The Israeli military said its air force struck a facility used by Hezbollah to store mid-range rockets in southern Lebanon on Thursday amid mutual ceasefire breach accusations.

Additionally, Russia on Thursday unleashed its second big attack on Ukraine's energy infrastructure this month, triggering deep power cuts across the country.

Bullion is traditionally seen as a safe investment during economic and geopolitical uncertainties, such as conventional or trade wars.

Gold prices could test or dip below the key $2,600 level, with the metal likely to remain in a consolidation phase through December, Lan added.

Markets are pricing in a 66.5% chance of a 25-basis-points rate cut by the Federal Reserve in December, per the CME Fedwatch tool, potentially marking 2024's third cut.

Major U.S. data releases next week, including job openings, the ADP employment report and the employment report, are expected to offer cues about the Fed's rate cut outlook.

Spot silver added 1.1% to $30.58 per ounce, platinum gained 0.9% to $939.75 and palladium advanced 0.9% to $984.25. All three metals were set for weekly declines.