The socialist federal government sought a supreme court ruling to halt demonstrations that have been happening for a week, but it was turned down Friday. Elections for mayors and regional officials are scheduled Sunday.
Spain has the highest unemployment rate in the European Union at 21 percent, with a record 4.9 million people out of work, CNN said.
Interior Minister Alfredo Perez Rubalcaba told a news conference Friday the government had instructed police to be tolerant and not stoke violence among demonstrators.
"What we are going to do is comply with the law," Rubalcaba said.
Traditionally, the day before elections in Spain is called a "day of reflection" in which campaigning is prohibited, although economist Fernando Fernandez told CNN he doubted the government would clamp down on protests.
"The government does not want to have any sort of violence taking place the day prior to the elections," he said. "This would have a very large political cost and electoral cost."