Gold prices set for weekly gain on smaller US rate-hike bets

Gold prices edged higher on Friday and were on track for a fourth weekly gain, supported by a weaker dollar and expectations of slower interest rate hikes by the US Federal Reserve.

FUNDAMENTALS

* Spot gold was up 0.1% at $1,897.92 per ounce, as of 0045 GMT. Prices gained 1.7% so far this week.

* US gold futures GCv1 rose 0.2% to $1,901.80.

* The dollar index was on track for a weekly loss of 1.6%. A weaker greenback makes bullion more attractive to overseas buyers.

* US consumer prices fell for the first time in more than 2-1/2 years in December, offering hope that inflation was now on a sustained downward trend.

* Atlanta Federal Reserve Bank president Raphael Bostic said on Thursday that the inflation data may allow the Fed to scale back to quarter-point rate hikes at its upcoming meeting.

* Gold is seen as an inflation hedge, but higher interest rates increase the opportunity cost of holding the asset.

* SPDR Gold Trust GLD, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.03% to 912.14 tonnes on Thursday. 

* Spot silver edged 0.2% higher to $23.82, platinum gained 0.4% to $1,071.74 and palladium slipped 0.6% to $1,782.13.