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Gold prices drifted higher on Thursday, as safe-haven demand countered a firmer dollar, while palladium hit a more than one-month peak.

Spot gold rose 0.3% to $2,725.51 per ounce by 0143 GMT. Prices hit a record high of $2,758.37 on Wednesday as U.S. election jitters and Middle East tensions boosted demand.

U.S. gold futures gained 0.3% to $2,738.50.

The U.S. dollar lingered near a three-month high, limiting gold's potential for a further rally. A stronger dollar makes gold more expensive for other currency holders. [USD/]

U.S. Vice President Kamala Harris and Republican Donald Trump are in a tight race, with less than two weeks to go until the Nov. 5 presidential elections.

Israeli strikes pounded Beirut's southern suburbs and Hezbollah said it fired precision guided missiles for the first time at Israeli targets.

"For the rest of 2024, we see potential highs of $2,800, with 2025 targets around $3,000 or higher, driven by continued geopolitical risks, U.S. monetary easing cycle, and central bank purchases," said Sugandha Sachdeva, founder of New Delhi-based research firm SS WealthStreet.

U.S. economic activity remained steady from September to early October, with a slight rise in hiring, hinting at a likely 25-basis-point Federal Reserve rate cut soon.

Lower rates reduce the opportunity cost of holding non-yielding bullion.

"The Fed's monetary easing cycle, stimulus measures in China, and supply constraints will continue to drive silver prices higher into 2025 where it could potentially scale higher levels of around $45," Sachdeva said.

Spot silver firmed 0.4% to $33.84 per ounce.

Palladium jumped 4% to $1,100.50, its highest level since Sept. 18. The U.S. asked Group of Seven allies to consider sanctions on Russian palladium and titanium, Bloomberg News reported. Russia's Nornickel is the world's largest palladium producer.

Platinum rose 1% at $1,025.85.