May 7 (Reuters) – Gold prices rose to a 2-1/2-month high on Friday and were on track for their best week in six months, boosted by a weaker dollar and a pullback in Treasury yields as investors cautiously await U.S. non-farm payrolls report due later in the day.

Spot gold was up 0.2% at $1,818.73 per ounce by 0652 GMT, after hitting its highest since Feb. 16 earlier in the session. Bullion gained nearly 3% so far this week.

U.S. gold futures rose 0.2% to $1,818.80.

“The weaker dollar and U.S. Treasury yields dropping below 1.6% has helped gold prices to go above $1,800,” Brian Lan, managing director at dealer GoldSilver Central said.

“The U.S. jobs data is very important point … if data comes out really good, we can see people being more positive on the economy and it might lead to Federal Reserve increasing the interest rates earlier than expected, which will impact gold.”

The dollar index slipped to a one-week low against its rival, while benchmark U.S. 10-year Treasury yields hovered close to a two-week low.

Market participants await U.S. monthly jobs report due at 08:30 a.m. EST. Economists expect 978,000 new U.S. jobs for April, according to a Reuters poll.

Data on Thursday showed weekly U.S. jobless claims dropped to a 13-month low.

The economic outlook is brightening, but more improvements are needed before the Fed will start to scale back monetary support, Cleveland Fed Bank President Loretta Mester said.

Spot gold may test a resistance at $1,830 per ounce, a break above could lead to a gain to $1,847, according to Reuters technical analyst Wang Tao..

Elsewhere, palladium rose 0.6% to $2,963.43 per ounce, after hitting an all-time high of $3,017.18 earlier this week.

Silver eased 0.1% to $27.26 per ounce, though the metal climbed more than 5% this week. Platinum slipped 0.5% to $1,246.79.

(Reporting by Brijesh Patel in Bengaluru, Editing by Sherry Jacob-Phillips)