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Gold backs down but remains above $3,000 an ounce

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Fed's cautious tone provides dollar support

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Investor focus turns to details of Trump's reciprocal tariffs

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Nasdaq breaks four-week losing streak

(Updates to U.S. market close)

By Stephen Culp

NEW YORK, March 21 (Reuters) - Wall Street edged higher and the dollar gained ground on Friday after U.S. President Donald Trump hinted he would be flexible regarding a new round of tariffs expected to be imposed early next month.

Even so, lingering economic uncertainties and churning geopolitical tension kept investors cautious.

All three major U.S. stock indexes reversed their losses after Trump's announcement, but their gains were held in check by weakness in economically sensitive sectors, such as chips , materials and small caps.

All three indexes registered weekly gains.

Gold was off sharply from its all-time high but remained above $3,000 per ounce, a level it breached last week for the first time.

"Clearly these are challenging times for investors," said Terry Sandven, Chief Equity Strategist at U.S. Bank Wealth Management in Minneapolis. "With volatility and uncertainty on the rise, angst is swaying sentiment, while tariffs and their associated implications are rattling consumer and investor confidence."

Chicago Federal Reserve President Austan Goolsbee and New York Fed President John Williams said it would be premature to gauge the economic effects of U.S. President Trump's tariff actions, and the central bank has time to determine the direction of its monetary policy.

A spate of central bank policy meetings held investors' focus for much of the week, with the Fed, the Bank of Japan and the Bank of England all holding rates steady.

The common theme among monetary policymakers was caution, with most adopting a "wait and see" stance toward Trump's tariffs and trade policy, which has fostered what Fed Chair Jerome Powell called "unusually elevated" uncertainty.

Investors await clarification on details of Trump's reciprocal tariffs expected to take effect on April 2.

Israeli airstrikes on Gaza and a huge blast from a Ukrainian drone attack on a Russian military airfield also dampened risk appetite and raised the appeal of safe-haven assets.

"The number of factors that have the potential to impact investor sentiment has risen and this is fueling uncertainty," Sandven added. "Global tensions are heightened, valuation is elevated, and company guidance is measured."

"That's the teeter-totter we're seeing in the broader market."

Adding to the turmoil, Britain's Heathrow Airport was shut due to a huge fire at a nearby electrical substation. Markets watched for financial fallout from the detention of Turkish President Tayyip Erdogan's main political rival. Eyes were also on Germany's massive fiscal stimulus package, on track to pass the Bundesrat upper house of parliament on Friday.

U.S. economic indicators in the coming week will include housing and industrial data. On Thursday, the Commerce Department will give its third and final take on fourth-quarter GDP. Its Personal Consumption Expenditures report is due on Friday.

The Dow Jones Industrial Average rose 31.88 points, or 0.08%, to 41,985.20, the S&P 500 rose 4.55 points, or 0.08%, to 5,667.44 and the Nasdaq Composite rose 92.43 points, or 0.52%, to 17,784.05.

European shares slipped, yet the STOXX Euro 600 nabbed a weekly gain, extending its year-to-date outperformance.

MSCI's gauge of stocks across the globe fell 1.47 points, or 0.17%, to 842.01.

The pan-European STOXX 600 index fell 0.6%, while Europe's broad FTSEurofirst 300 index fell 12.99 points, or 0.59%.

Emerging market stocks fell 9.49 points, or 0.83%, to 1,131.20. MSCI's broadest index of Asia-Pacific shares outside Japan closed lower by 0.81%, to 588.59, while Japan's Nikkei fell 74.82 points, or 0.20%, to 37,677.06.

The dollar gained ground against the euro, ending the week higher as the approaching tariff deadline prompted caution.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.33% to 104.13, with the euro down 0.32% at $1.0816.

Against the Japanese yen, the dollar strengthened 0.37% to 149.33.

U.S. 10-year Treasuries turned higher to snap a four-day streak of declines as investors weighed tariff uncertainties against the probability that the Fed will hold rates steady for the time being.

The yield on benchmark U.S. 10-year notes rose 1.9 basis points to 4.252%, from 4.233% late on Thursday.

The 30-year bond yield rose 3.9 basis points to 4.5948% from 4.556% late on Thursday.

The 2-year note yield, which typically moves in step with interest rate expectations for the Federal Reserve, fell 0.9 basis points to 3.948%, from 3.957% late on Thursday.

Crude oil prices edged higher and appeared set to notch a second straight weekly gain as new U.S. sanctions on Iran and the latest OPEC+ output plan raised expectations of tighter supply.

U.S. crude rose 0.31% to settle at $68.28 per barrel, while Brent settled at $72.16 per barrel, up 0.22% on the day.

Gold paused its record run, dipping in opposition to the stronger dollar, but notched its third weekly gain.

Spot gold fell 0.8% to $3,020.10 an ounce. U.S. gold futures fell 0.58% to $3,022.50 an ounce.

(Reporting by Stephen Culp; Additional reporting by Ankur Banerjee and Alun John; Editing by Alison Williams, David Gregorio and Deepa Babington)