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Gold prices soared to an all-time high on Friday as the dollar weakened amid the prospect of a reduction in U.S. interest rates, while palladium has gained 15% so far this week.

Spot gold was up 0.4% at $2,567.99 per ounce, as of 0501 GMT, after hitting a record high of $2,570.03 earlier in the session. Bullion has gained about 3% for the week so far.

U.S. gold futures rose 0.6% to $2,596.20.

The dollar fell to a one-week low, making greenback-priced gold less expensive for other currency holders. [USD/]

"Regardless of the size of the initial Fed rate cut, we look to be on the verge of a potentially long and frequent easing cycle, which is a scenario that bodes well for assets such as gold which are non-yielding," said Tim Waterer, chief market analyst at KCM Trade.

The International Monetary Fund said on Thursday it was appropriate for the Fed to begin a long-awaited monetary easing cycle at its meeting next week as upside risks to inflation have subsided.

Traders see a 45% chance for a 50-basis-point reduction on Sept. 18 meet and 55% odds for a 25 bp cut.

Investors will scan the U.S. consumer sentiment (preliminary) data due later in the day for further clues on rate outlook.

Gold's trajectory remains very bullish with a lot of uncertainly on the geopolitical and economic front, said Brian Lan at Singapore-based dealer GoldSilver Central

"Central bank gold purchases are still strong as the future seems a little bleak and they want to hedge against risk."

Spot silver edged 0.2% higher to $29.97 and platinum gained about 1% to $985.47.

Palladium edged 0.1% higher to $1,047.59 and was headed for its best week since December 2023, fuelled by export curb concerns.

Russian President Vladimir Putin said on Wednesday that Moscow should consider limiting exports of uranium, titanium and nickel in retaliation against the West.