Gold prices hit a one-month high on Friday and were set for a second straight week of gains as the latest U.S. data pointed to signs of slowing inflation, bolstering investor expectations of an interest rate cut by the Federal Reserve in June.

Spot gold edged 0.5% higher to $2,053.10 per ounce, as of 1226 GMT, its highest level since Feb. 2. U.S. gold futures firmed 0.4% at $2,063.

"Inflation figures came out pretty much as expected and probably we are going to have the first rate cut very soon," Natixis analyst Bernard Dahdah said.

Data on Thursday showed PCE inflation in January rose 2.4%, the smallest annual increase since February 2021, after a 2.6% advance in December.

Receding inflationary pressures have helped the U.S. central bank to set the table for rate cuts likely later this year, potentially boosting demand for the non-yielding bullion.

"The Fed rate cuts have to be relatively deep, whereby it's no longer interesting to hold bonds and invest into ETFs instead. I think there's still some space before we see a strong pickup in gold holdings," Dahdah said.

The world's largest gold-backed exchange-traded fund, SPDR Gold Trust's holdings, fell 3.3% in February and is down 6.4% so far this year.

Investors will closely watch for remarks from at least six Fed policymakers due later on Friday.

On the physical front, gold demand in India was subdued for the week as an uptick in domestic prices dented sentiment and prompted buyers to delay purchases.

Spot silver rose 0.2% to $22.72 per ounce as it looked set of extend declines for a second straight week.

Spot platinum was steady at $876 per ounce, and palladium gained 0.8% to $949.39. Both were down on a weekly basis.

Platinum group metals producer Impala Platinum said it could shut some of its loss-making South African mining operations if metal prices deteriorate further and restructuring efforts fail to improve margins.

(Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Vijay Kishore and Sriraj Kalluvila)