Gold edged higher on Friday and was set for its third straight weekly gain, as concerns over the fast-spreading Delta variant of COVID-19 and a drop in US Treasury yields lifted the safe-haven metal's demand.

Spot gold rose 0.2% to $1,805.39 per ounce, by 0312 GMT. For the week so far, it is up more than 1%.

US gold futures gained 0.4% to $1,806.50.

"The new rise in the Delta variant causing some concerns on the global growth and the data out of US started to ease off a little bit is helping gold," Stephen Innes, managing partner at SPI Asset Management, said.

Gold hits 3-week peak on lower US bond yields

"Real rates coming down is very supportive for gold. However, the dollar is holding up to a large degree and I think that in itself is limiting gold's move."

Benchmark US 10-year Treasury yields languished near more than a four-month low, reducing the opportunity cost of holding non-interest bearing gold.

Sentiment in wider equity markets remained fragile as Delta virus worries threatened global economic recovery, sending Asian shares to a two-month low.

Data on Thursday showed the number of Americans filing new claims for unemployment benefits rose unexpectedly last week, indicating that the labour market recovery continues to be choppy.

Minutes of the US Federal Reserve's June policy meeting released on Wednesday showed that while the economic recovery "was generally seen as not having yet been met," Fed officials agreed they should be poised to act if inflation.

Fears over an imminent monetary policy tightening by the Fed have weighed on bullion, sending gold down 7% in June.

Limiting gold's appeal, the US dollar on Friday rose 0.1% towards a three-month peak hit in the previous session.

Silver was steady at $25.89 per ounce, but was heading for a weekly loss.

Palladium eased 0.1% to $2,803.26, while platinum rose 0.2% to $1,077.15.