Gold prices hit a record high of $2,600 on Friday in a searing rally, as the prospect of more U.S. interest rate cuts burnished its appeal amid global uncertainties.

Spot gold was up 0.7% at $2,604.50 per ounce by 0749 GMT after hitting a record high of $2,609.62. U.S. gold futures rose 0.6% to $2,630.00, while silver gained 1.1% to $31.12.

The Federal Reserve began its easing cycle with an outsized half-percentage-point cut on Wednesday. Policymakers also projected another half-point reduction by the year-end, a full point next year and an additional half-point trim in 2026.

Lower rates reduce the opportunity cost of holding gold, since it pays no interest.

"We remain very positive on gold, as it is significantly under owned in the Western world and is one of the few assets that can counter the many fiscal threats that currently exist," said Ryan McIntyre, senior portfolio manager at Sprott Asset Management.

"Beyond rate cuts, gold will also benefit from the ongoing debasement of the U.S. dollar, the precarious fiscal situations of many Western nations, and the global desire for a store of value independent of other assets and institutions."

A weaker dollar makes greenback-priced bullion more attractive to other currency holders.

Bullion has risen over 26% so far in 2024, with long-drawn conflicts in the Middle East and Europe adding to uncertainties for global investors.

There's a "buy-the-dip environment" at present, and gold could push towards $2,700-$2,800 over the next 12 months, said Kyle Rodda, financial market analyst at Capital.com.

But the sky-high prices have taken a toll on retail demand in price-sensitive Asia, with top consumer China refraining from importing gold from Switzerland for the first time in over three years in August, while Indian dealers offered steep discounts.

In other metals, palladium was up 0.5% to $1,085.77, while platinum shed 0.3% to $986.01 and headed for a weekly fall.

(Reporting by Ashitha Shivaprasad and Daksh Grover in Bengaluru; Editing by Arpan Varghese and Varun H K)