Gold prices were little changed on Friday, but were headed for a small weekly gain due to a weaker dollar and lingering economic concerns, while investors looked ahead to the Federal Reserve's policy move next week.

 

FUNDAMENTALS

* Spot gold was little changed at $1,986.71 per ounce by 0042 GMT, but was headed for a 0.2% weekly gain.

* U.S. gold futures eased 0.1% to $1,996.20.

* The dollar index was largely unchanged on the day, but was set for a weekly fall, making gold less expensive for other currencies holders.

* U.S. economic growth slowed more than expected in the first quarter as an acceleration in consumer spending was offset by businesses liquidating inventories in anticipation of weaker demand later this year amid higher borrowing costs, data showed.

* The FOMC (Federal Open market Committee) gathers on May 2-3, and markets are pricing in a 85.4% chance of a 25 basis points rate hike.

* Although gold is considered a hedge against economic uncertainties, higher rates tend to dull zero-yielding bullion's appeal.

* Meanwhile, the U.S. Senate showed no sign of moving to avoid a looming debt-ceiling crisis on Thursday, as Republicans rejected calls to raise the $31.4 trillion limit without conditions and Democrats dismissed the idea of talks.

* The Fed's emergency lending to banks rose modestly in the latest week and remained at very high levels, even as many central bankers argue the worst of the banking sector's latest stresses are waning.

* Elsewhere, core consumer inflation in Japan's capital beat expectations in April and an index stripping away fuel costs rose at the fastest pace in four decades, highlighting the challenge new the central bank chief faces in keeping ultra-low interest rates.

* Spot silver fell 0.3% to $24.88 per ounce, while platinum rose 0.3% to $1,079.67 per ounce. Palladium inched 0.1% lower to $1,494.18.

(Reporting by Arundhati Sarkar in Bengaluru; editing by Uttaresh Venkateshwaran)