Gold prices edged higher on Friday after recent data supported bets for a Federal Reserve interest rate cut next month, while market participants focussed on the U.S. Producer Price Index (PPI) report for further direction. Spot gold rose 0.3% to $2,636.13 per ounce but was down about 0.6% for the week. U.S. gold futures rose 0.5% to $2,653.40. The dollar index fell from two-month highs. A weaker dollar makes bullion more attractive for other currency holders. Data on Thursday showed that U.S. consumer prices rose slightly more than expected in September, while jobless claims increased to 258,000 in the week ended Oct. 5, versus estimates of 230,000. Markets currently see an 83% chance of a 25-basis-point rate reduction in November and a 17% probability that the Fed will keep rates on hold, according to CME's FedWatch. Lower interest rates reduce the opportunity cost of holding bullion. Gulf states are lobbying Washington to stop Israel from attacking Iran's oil sites because they are concerned their own oil facilities could come under fire from Tehran's proxies if the conflict escalates, three Gulf sources told Reuters.