Gold steadied on Friday as the dollar eased, but was still bound for a weekly dip following indications from U.S. Federal Reserve officials that more interest rate hikes were in the offing.

Spot gold was little changed at $1,760.98 per ounce by 1157 GMT, set for a weekly decline of about 0.5%. U.S. gold futures fell 0.1% to $1,762.20.

The gold market seems to be weighing up two different things at the moment, said Craig Erlam, senior market analyst at OANDA.

On one hand is U.S. economic data suggesting lower inflation that gives room for the Fed to slow tightening, which should help gold, while on the other, a cautious Fed that doesn't want to shift the tone of their message based on any one piece of economic data, Erlam said.

While gold has shed 15% since its March peak after the Fed began tightening monetary policy, it has gained about 8% since the beginning of November as markets started pricing in a slower pace of rate hikes.

The dollar index fell, making bullion cheaper for overseas buyers yet was headed for a weekly rise.

Markets currently see an 87% chance of a 50-basis point hike at the Fed's December meeting.

Gold could, therefore, remain volatile until there's clear direction from the Fed, said Jigar Trivedi, an analyst with Mumbai-based Reliance Securities.

Although bullion is considered an inflation hedge, higher interest rates raise the opportunity cost of holding. Analysts said institutional investors are wary and further gains for gold could be elusive.

On the physical front, Chinese premiums fell sharply as buying slowed in the top consumer.

Spot silver rose 0.7% to $21.10 per ounce, while palladium fell 1.5% to $1,975.95.

Platinum was steady at $981.45, but is headed for its biggest weekly drop since September.

(Reporting by Arundhati Sarkar in Bengaluru, additional reporting by Seher Dareen; Editing by Savio D'Souza and Shounak Dasgupta)