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Gold prices rose on Thursday on expectations that the Federal Reserve might begin interest rate cuts next month, and underpinned by ongoing tensions in the Middle East, while a slew of U.S. economic data remained on investors' radar.

Spot gold added 0.6% to $2,516.63 per ounce by 0850 GMT, not too far from a record high of $2,531.60 hit on Aug. 20.

U.S. gold futures rose 0.5% to $2,550.00.

The U.S. initial jobless claims and GDP data are due at 1230 GMT. The Personal Consumption Expenditures (PCE) price index, the Fed's preferred measure of inflation, is due on Friday.

If the inflation report is positive, it is another argument in favor of cutting rates in September and will push prices upwards as low rates are good for non-yielding gold, said Julia Khandoshko, CEO at European broker Mind Money.

Fed Bank of Atlanta President Raphael Bostic on Wednesday said it may be "time to move" on rate cuts, but he wants to be sure before pulling that trigger.

Traders have fully priced in a 25 basis point Fed rate cut next month, with a 34.5% probability of an outsized 50 bps reduction.

In the Middle East, fighting continued in the Gaza Strip between Israel and Hamas militants. Internationally-mediated talks to end the conflict continue, with Hamas and Israel trading blame for a lack of progress.

"Recent geopolitical events show that it is better to stay on the safe side, and nothing can be more trustworthy than good old gold," added Khandoshko.

Spot silver firmed 1.3% to $29.48.

Platinum gained 1.2% to $940.85 and palladium climbed steadied at $946.16. The sister metals are used primarily in engine exhausts to reduce emissions.

Impala Platinum's CEO said he saw little prospect of new platinum mines being built in South Africa as investors struggle with a price slump amid uncertainty over future demand for platinum-group metals due to growth in EVs.