Gold prices crawled up on Friday, buoyed by a slight pullback in the dollar and safe haven demand due to escalating tensions in the Middle East.

Spot gold was up 0.1% at $2,026.20 per ounce at 1325 GMT, and was on track for a small weekly rise. U.S. gold futures were 0.3% higher at $2,036.10 per ounce.

"This week, the U.S. dollar index has been slightly down ... that is one of the factors which has provided gold a little bit support to trade higher," said Quantitative Commodity Research analyst Peter Fertig.

The dollar index was heading for its first weekly dip in almost two months. A weaker dollar makes greenback-priced bullion less expensive to overseas buyers.

Traders firmed up bets against any U.S. interest rate cuts before June after Fed Governor Christopher Waller said he was in "no rush" to cut rates. Most policymakers at the Fed's last meeting were concerned about the risks of cutting interest rates too soon, minutes showed.

Recent data showing higher-than-expected U.S. consumer and producer prices also dashed speculation about an early interest rate cut, further weighing on bullion.

Lower interest rates boost the appeal of holding non-yielding bullion.

"More hawkish comments from Fed officials overnight have been a modest drag for the yellow metal, suffering from higher U.S. interest rates and a reduction in U.S. rate cut expectations for this year," said UBS analyst Giovanni Staunovo.

Meanwhile, a surge of interest in bitcoin exchange-traded funds (ETFs) is prompting some investors to swap out holdings in gold-backed ETFs.

Elsewhere, spot platinum dropped 0.3% to $899.30 per ounce, palladium fell 0.3% to $964.86. Silver gained 0.1% to $22.76 per ounce, and was down 3% so far in the week.

(Reporting by Anjana Anil in Bengaluru; Editing by Sohini Goswami and Mark Potter)