Feb 19 (Reuters) - Gold prices edged higher on Friday, recovering from a more than seven-month low hit earlier as the U.S. dollar eased, but rising Treasury yields kept bullion on course for its biggest weekly drop since early January.

Spot gold was up 0.3% at $1,781.16 per ounce by 10:39 a.m. EST (1539 GMT), after declining to its lowest since July 2 at $1,759.29 earlier. The safe-haven metal was down 2.3% so far this week, its biggest weekly drop since the week of Jan. 8. U.S. gold futures rose 0.3% to $1,780.30.

"The drop in the U.S. dollar has likely driven gold higher," said Bart Melek, head of commodity strategies at TD Securities, adding the move could also be technical in nature. The U.S. dollar was down 0.3% against key rivals and looked to post its second straight weekly loss. "(However), the problem (for gold) continues to be the yields, and we continue to see rates across the curve move higher," Melek added.

Benchmark U.S. Treasury yields rose to a near one-year high earlier. While gold is seen as an inflation hedge, higher inflation expectations have pushed yields up, increasing the opportunity cost of holding non-yielding bullion. Gold should still benefit from continued loose monetary policy and low real interest rates this year, analysts said.

Commerz bank analysts said in a note that gold's behaviour resembled that of a tsunami, with prices receding in the first phase before coming back all the more violently. Autocatalyst metal platinum rose 1% to $1,287.58 an ounce, and was set to post its third straight weekly gain, having risen to a more than six-year peak earlier in the week.

Palladium rose 0.6% to $2,365.39 an ounce. Silver rose 1.4% to $27.40, and was set to register its second straight weekly gain.