(Reuters) - Gold edged up on Friday, rising in tandem with other commodities and equities, after a lower-then-expected inflation rate out of China suggested more monetary easing could be on the way, while a rebound in the dollar kept gains in check. A string of data showed China's factory output, investment and retail sales slowed in February, while the inflation rate staged an unexpectedly sharp fall to a 20-month low, giving policymakers room to further loosen monetary policy to support slowing growth. The prospect of ample cash in the market offset the appeal of gold as an inflation hedge in the short term, analysts said. "A lower headline inflation number means that the central bank can continue to be very accommodative, which means printing more money," said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong. "The more money it prints versus the gold out there, the more it should raise the value of gold versus that money." Spot gold inched up 0.3 percent to $1,703.89 an ounce by 0742 GMT, on course for a 0.5-percent fall this week, its second weekly decline in a row. U.S. gold gained 0.4 percent to $1,704.70. Technical analysis suggested that spot gold could rise towards $1,712 an ounce during the day, said Reuters market analyst Wang Tao. Greece claimed a major success for its bond swap offer to private creditors to avert an imminent default, though many believe Greece's troubles are nowhere near an end as the deal will not solve its deep-seated economic problems. The euro edged lower on profit-taking while the dollar inched up against a basket of currencies after the Greek debt swap deal. "People are still worried about the economic conditions and would rather not buy large quantities of physical gold at this point," said Dick Poon, manager of precious metals at Heraeus in Hong Kong. Poon said that physical buying dropped after prices rebounded above $1,700 as investors adopted a wait-and-see attitude, especially before the release of the key U.S. non-farm payrolls data due later in the day. Supportive of platinum group metals, February car sales in China rose 26.5 percent on the year to 1.21 million, after a 23.8 percent decline in January, though the numbers might have been distorted by the Lunar New Year holiday that fell in late January this year. Spot platinum gained 0.7 percent to $1,668.99 an ounce, and spot palladium lost half a percent to $695.83.

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