Gold steadied near its all-time high on Friday and was set for a monthly gain, driven by U.S. rate-cut bets and geopolitical uncertainty, while focus shifted to a key inflation report.
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Spot gold was steady at $2,520.36 per ounce, as of 1132 GMT, just shy of the record high of $2,531.60 hit on Aug. 20. The bullion has gained about 3% for the month.
U.S. gold futures edged 0.3% lower to $2,552.90.
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 (bp) 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 now await the U.S. Personal Consumption Expenditures (PCE) data due at 1230 GMT. This will be the last PCE report before the Fed's highly anticipated September meeting. Economists polled by Reuters forecast a marginal rise in inflation to 2.6% on an annual basis, from the previous month's 2.5%.
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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 highs approaching $2,600, added Evangelista.
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.
Spot silver rose 0.2% to $29.51 per ounce and platinum gained 0.3% to $940.90.
Palladium rose 0.4% to $983.43 and gained over 6% so far this month.