Gold prices were on track for a third straight weekly decline on Friday as investors fretted over the prospects of aggressive rate hikes from the U.S. central bank, though slight pullback in dollar helped the precious metal to tick higher on the day.

Spot gold rose 0.2% to $1,881.17 per ounce by 917 GMT, but was down 0.8% for the week. U.S. gold futures were up 0.4% to $1,883.30.

The dollar index eased 0.3% after hitting a fresh 20-year high, making gold less expensive for those holding other currencies.

However, the U.S. currency was headed for fifth weekly gain, while the benchmark U.S. Treasury yields held near the key 3% level.

As long as there are uncertainties about global growth and inflation there could be phases where gold prices will gain because equities are likely to stay under pressure, said Harshal Barot, a senior research consultant for South Asia at Metals Focus.

The base case, though, is that the bullion is likely to be under pressure, Barot said. European stocks headed for their worst week in two months as investors expect bigger interest rate hikes will be needed to rein in inflation. While gold is perceived as an inflation hedge, higher U.S. interest rates lift the opportunity cost of holding zero-yield bullion.

"Gold was unable to capitalize on Powell's less hawkish than expected message this week, with bullion bulls aware that U.S. rates are bound to rise anyway," Han Tan, chief market analyst at Exinity, said.

"Should Friday's non-farm payrolls point to a resilient U.S. jobs market that paves the way for more Fed policy tightening, that could strengthen the cap on gold's upside."

The U.S. Federal Reserve on Wednesday raised its benchmark rate by half a percentage point, the most in 22 years, but Chairman Jerome Powell explicitly ruled out raising rates by three-quarters of a percentage point in a coming meeting.

Silver fell 0.4% to $22.41 per ounce, platinum slid 2.5% to $955.76 and palladium dropped 2.4% to $2,135.51.

(Reporting by Eileen Soreng in Bengaluru Editing by Tomasz Janowski)