Australian shares rose on Friday as gold and mining stocks climbed ahead of the central bank's rate decision, while signs of slowing wage pressure in the U.S. boosted hopes that the Federal Reserve will pause its monetary tightening cycle.

The S&P/ASX 200 index rose 0.5% to 7,145.1 points at the close of trade. The benchmark was 0.1% down for the week.

Investor sentiment was bolstered after the number of Americans filing new claims for unemployment benefits rose modestly last week, while private payrolls increased more than expected in May, pointing to a still-tight labor market that could push the Fed to keep rates elevated. Australian investors are waiting for the central bank's rate hike decision next week.

A Reuters poll of economists suggests that the Reserve Bank of Australia (RBA) will hold rates at 3.85% in June, but may raise them again soon.

However, Josh Gilbert, market analyst at eToro, a multi-asset investment company, believes that the ASX may face more downside pressure over the next week as investors digest the possibility of another hike from the RBA.

On the other hand, the country's independent wage-setting body said it would raise the minimum wage by 5.75% from July, as families grapple with soaring living costs.

But, analysts at NAB say that higher wage growth will cause still-high inflation to persist, forcing the RBA to go for another round of rate hikes in the future.

Meanwhile, the U.S. Senate passed legislation suspending the government's $31.4 trillion debt ceiling, averting what would have been a first-ever default.

On the Australian bourse, gold stocks led gains, rising 3%.

Miners continued the momentum and rose 2.7%, while Rio Tinto Ltd rose 2.5% after investing $395 million in a desalination plant in Pilbara.

Energy and tech stocks further added 1.2% and 0.7%, respectively, to the benchmark.

New Zealand's benchmark S&P/NZX 50 index rose 0.3% to finish trade at 11,880.9 points. (Reporting by Nausheen Thusoo in Bengaluru; Editing by Sonia Cheema)