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 Gold prices lingered near all-time high levels on Friday and were set for a monthly gain, driven by U.S. rate-cut bets and geopolitical uncertainty, while focus shifted to a key inflation report.

Spot gold was up 0.1% at $2,523.59 per ounce, as of 0908 GMT, just shy of a record high of $2,531.60 hit on Aug. 20. The bullion has gained more than 3% for the month.

U.S. gold futures edged 0.1% lower to $2,556.70.

In the Middle East, there are no signs yet of a concrete breakthrough in ceasefire talks between Israel and Hamas militants.

Elsewhere, traders see a 67% chance of a 25-basis-point reduction by the Federal Reserve next month and a 33% chance of a 50-bps cut, according to the CME FedWatch tool.

"I see (gold) prices approaching the $3,000 level before the end of the year, driven primarily by a dovish Fed, but also by safe-haven demand and continuing central bank purchases," said Ricardo Evangelista, senior analyst at ActivTrades.

Lower interest rates increase the appeal of holding non-yielding gold.

Investors await the U.S. Personal Consumption Expenditures (PCE) data due at 1230 GMT for further cues on rate outlook. The PCE index is the Fed's favoured inflation measure.

A soft inflation report would likely reinforce expectations of a dovish Fed, leading to lower Treasury yields and a weaker dollar, following which bullion prices could reach new all-time highs approaching $2,600, added Evangelista. [USD/] [US/]

On the physical front, gold discounts in India widened this week to their highest in six weeks as a price rebound dampened purchases, while new import quotas failed to lift Chinese demand. [GOL/AS]

Spot silver rose 0.3% to $29.53 per ounce and platinum gained 0.2% to $939.36.

Palladium rose 0.2% to $982.00 and gained 6% so far this month.