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Gold held firm near a five-week high on Friday and was set for a third straight week of gains, as U.S. inflation data released earlier this week raised expectation that the Federal Reserve might cut interest rates further this year.

Spot gold was flat at $2,715.09 per ounce, as of 0332 GMT. Bullion has gained about 1% so far this week.

U.S. gold futures slipped 0.1% to $2,746.90.

On Thursday, gold rose more than 1% to hit its highest since Dec. 12 after a slew of U.S. economic data pressured Treasury yields further. [US/]

Gold has been supported by weakness in the dollar after inflation data this week sided with rate-cut expectations, said Ajay Kedia, director at Kedia Commodities in Mumbai. [USD/]

"We see support at $2,694 and a breach of the $2,720 level will take prices towards $2,770 on the higher side," Kedia said.

Fed Governor Christopher Waller said three or four rate cuts are still possible this year if U.S. economic data weakens further.

Expectations for further Fed rate cuts grew after the release of December inflation data on Wednesday and Waller's remarks on Thursday.

Investor expectations have shifted towards a view of two cuts with a good chance of the first one coming as early as May.

"Increased uncertainty due to the incoming administration and its potential actions are influencing gold as an instrument to trade short-term volatility," said Michael Langford, chief investment officer at Scorpion Minerals.

With President-elect Donald Trump set to begin his second term next week, the focus remains on his policies that analysts expect would fuel inflation.

Non-yielding gold is often used as an inflation hedge.

Spot silver rose 0.1% to $30.82 per ounce, climbing more than 1% this week in what would be its third consecutive weekly gain.

Palladium eased 0.1% to $939.53, losing about 0.9% this week. Platinum added 0.5% to $936.90 but was down about 3% in what could be its worst week since November.