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 Gold prices appeared set for a second consecutive weekly gain on Friday, after recent U.S. inflation data fuelled expectations that the Federal Reserve could cut interest rates this year.

Spot gold was up 0.1% at $2,379.14 per ounce, as of 0236 GMT. Bullion prices have gained 0.7% so far this week.

U.S. gold futures were flat at $2,383.20.

The dollar index was down 0.6% for the week so far, against its rivals, making gold less expensive for other currency holders.[USD/]

"The upward bias for gold prices may remain, with the recent run in U.S. economic data offering room for the Fed to consider earlier rate cuts in 2024 while geopolitical tensions rock on. The next target for gold bulls will be its record high," said IG market strategist Yeap Jun Rong.

"Gold having recovered almost 5% over the past two weeks, clarity over the U.S. consumer price index data and the upcoming weekend may also prompt some slight profit-taking."

Data this week showing signs of cooling inflation offered the U.S. Federal Reserve good news, but policymakers haven't openly shifted views yet about the timing of rate cuts investors are convinced will start this year.

Bullion is known as an inflation hedge, but higher rates increase the opportunity cost of holding non-yielding gold.

"Gold prices may correct lower as markets look to re?establish the historical relationship between gold and the U.S. dollar. It goes without saying that uncertainty will likely persist in gold markets in coming months," Commonwealth Bank of Australia said in a note.

Spot silver fell 0.2% to $29.53 per ounce after hitting an over three-year high in the previous session, and palladium dropped 1.1% to $982.77.

Platinum rose 0.3% to $1,060.15, after hitting its highest levels since May 12, 2023 in the previous session. The metal has gained about 7% so far for the week.