Gold prices edged up on a weaker dollar on Friday, but prospects of aggressive rate hikes from the U.S. Federal Reserve put bullion on course for a third consecutive weekly decline. Spot gold rose 0.3% to $1,883.11 per ounce by 10:40 a.m. ET (1440 GMT), but was down 0.7% for the week. U.S. gold futures rose 0.5% to $1,885.20.

The dollar index slipped 0.3% after hitting a 20-year high, making gold less expensive for overseas buyers. But capping bullion's upside, benchmark U.S. Treasury yield strengthened near the key 3% level, with stronger-than-expected U.S. jobs data perceived as building the case for bigger interest rate hikes.

"Gold traders basically saw the non-farm payroll report as another confirmation the Fed is going to remain on cruise control with delivering point rate increases over these next couple of policy meetings," said Edward Moya, a senior analyst with OANDA.

The bond market sell-off would also continue to weigh on gold, Moya added. The Fed on Wednesday raised its benchmark rate by half a percentage point, the most in 22 years, although Chairman Jerome Powell explicitly ruled out raising rates by three-quarters of a percentage point in a coming meeting. While gold is perceived as an inflation hedge, higher U.S. interest rates lift the opportunity cost of holding zero-yield bullion.

But Saxo Bank analyst Ole Hansen wrote in a note that overall, the outlook for gold was positive, "driven by the need to diversify from volatile stocks and bonds as inflation becomes increasingly imbedded and the ongoing geopolitical concerns."

Gold is considered a safe store of value during global uncertainties, such as the Ukraine war. Silver fell 0.3% to $22.44 per ounce, platinum fell 1.6% to $964.95, and palladium was down 5.5% to $2,068.01.

(Reporting by Seher Dareen in Bengaluru; Editing by Krishna Chandra Eluri)