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 Gold prices were set to mark a third straight weekly rise on Friday, after data showing cooling inflation cemented bets for a rate cut in the U.S., with traders looking forward to comments from Federal Reserve's Chair Powell later in the day.

Spot gold rose 0.2% at $2,039.42 per ounce by 0427 GMT, after marking an over $60 rise in November - its second straight monthly rise.

U.S. gold futures for February delivery rose 0.1% to $2,059.00.

"If traders were convinced Fed cuts were coming in 2024, they're even more convinced now that PCE inflation came in softer - and that clearly benefited gold," City Index Senior Analyst Matt Simpson said.

Data on Thursday showed U.S. consumer spending rose moderately in October, while the annual increase in inflation was the smallest in more than 2-1/2 years.

Cooling inflationary pressures, and an easing labour market make a case for an end to the Federal Reserve's interest rate hiking campaign and boost the possibility of rate cuts in the months ahead, something two Fed officials also flagged this week.

Traders have advanced their bets for a rate cut by the U.S. central bank from about an 80% chance in May to a one-in-two chance in March, CME's FedWatch Tool shows.

Lower interest rates reduce the opportunity cost of holding non-interest-bearing bullion.

"However, month-end flow may have also been a factor, and seasonality tends to favour gains for gold between November and December," City Index's Simpson added.

Increasing bullion's appeal, the dollar index and 10-year Treasury yields edged lower. The dollar marked its weakest monthly performance in a year in November. [USD] [US/]

"Powell will dictate the (yellow) metal's direction today and set the trend for the rest of the year," Hugo Pascal, a precious metals trader at InProved, said.

Spot silver rose 0.2% to $25.29 per ounce. Platinum was down 0.1% to $925.67. Palladium rose 0.6% to $1,013.52 per ounce.