Gold prices extended gains to hit a record high on Friday on expectations of interest rate cuts by the Federal Reserve, while palladium was set to log its best week in nine months.

Spot gold firmed 0.3% to $2,565.86 per ounce by 1049 GMT, after hitting a record high of $2,572.81 earlier. U.S. gold futures rose 0.5% to $2,593.70.

The dollar slipped 0.4%, making bullion more attractive to other currency holders.

"Simple fact is that gold is rising because it's in a bull market. Long-term, gold's uptrend is clearly being supported by geopolitical violence and tensions ahead of the U.S. election," said Adrian Ash, director of research at Bullionvault.

"Beyond the ongoing bid for gold from emerging-market central banks, the current action remains confined to speculative trading in derivatives contracts, not physical bullion."

Traders raised bets for a 50-basis-point Fed rate cut next week to 45% from about 28% after the Financial Times and Wall Street Journal reported that the larger reduction was still an option.

Meanwhile, the European Central Bank cut interest rates again on Thursday.

The rate cut by the ECB probably provided a tailwind for gold, Commerzbank said in a note.

Investors often turn to bullion in a low-interest rate environment and as insurance in times of geopolitical uncertainty.

Hugo Pascal, precious metals trader at InProved, said "$3,000 is not out of the equation for 2025, but I guess we will need Chinese to show up at the party again mixed with a FOMO (fear of missing out) to see it."

Spot silver was up 0.3% to $30.

Palladium rose 0.4% to $1,050.65 and gained 15% this week. Platinum gained 1.3% to $990.10.

Any meaningful cuts to current supply could deliver significant volatility in the palladium market, Macquarie said in a note.

President Vladimir Putin said this week that Moscow should consider limiting exports of uranium, titanium and nickel.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Sonia Cheema and Mrigank Dhaniwala)