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Gold prices inched higher on Thursday, continuing its momentum from 2024, while traders sought more clarity on the U.S. Federal Reserve's interest rate trajectory and President-elect Donald Trump's policies.

Spot gold rose 0.39% to $2,634.15 per ounce, as of 0255 GMT. U.S. gold futures edged up 0.2% to $2,646.30.

Bullion surged over 27% in 2024, its largest annual gain since 2010, driven by Fed's substantial rate cuts and escalating geopolitical tensions.

The dollar index slipped 0.1%, making dollar-priced bullion more affordable for holders of other currencies.

"Gold seems to be consolidating in a tight range, which often signals a market that's poised for a breakout. I suspect that breakout will be to the upside," said Kyle Rodda, financial market analyst at Capital.com.

Gold is likely to remain bullish (in 2025), driven by geopolitical risks and expectations of rising government debt due to a deep fiscal deficit under Trump’s administration, despite potential challenges from slower Fed rate cuts and U.S. dollar strength, Rodda said.

The market now awaits a fresh set of catalysts, including a slew of U.S. economic data due next week that could influence the interest rate outlook for 2025, and Trump's tariff policies.

Meanwhile, traders anticipate the Fed to adopt a slow and cautious approach to further rate cuts in 2025, as inflation continues to exceed its 2% target.

Gold is viewed as a hedge against inflation, particularly in times of geopolitical and economic uncertainty.

According to the CME's FedWatch Tool, markets are pricing in just an 11.2% chance of a rate cut in January.

Spot silver rose 1.5% to $29.29 per ounce, palladium added 0.9% to $912.26, and platinum gained 0.7% to $917.14

Silver ended 2024 as its best year since 2020, while platinum and palladium declined.