Gold prices soared to an all-time high on Friday as the dollar weakened amid prospects of a U.S. interest rate cut next week, while palladium has gained 15% so far this week.

Spot gold was up 0.2% at $2,565 per ounce, as of 0258 GMT, after hitting a record high of $2,567.93 earlier in the session. Bullion has gained 2.7% for the week so far.

U.S. gold futures rose 0.5% to $2,593.40.

The dollar fell to a one-week low, making gold less expensive for other currency holders.

"Gold has been building house following its latest foray higher. Gains have been steady in nature, and a period of consolidation wouldn't be surprising before gold perhaps takes a run at $2,600 should the dollar remain on the backfoot," said Tim Waterer, chief market analyst at KCM Trade.

"Regardless of the size of the initial Fed rate cut, we look to be on the verge of a potentially long and frequent easing cycle, which is a scenario that bodes well for assets such as gold which are non-yielding."

The International Monetary Fund said on Thursday it was appropriate for the Fed to begin a long-awaited monetary easing cycle at its meeting next week as upside risks to inflation have subsided.

Traders see a 43% chance for a 50-basis-point reduction on Sept. 18 meet and 57% odds for a 25 bp cut.

Investors will scan the U.S. consumer sentiment (preliminary) data due later in the day for further clues on rate outlook.

Spot silver edged 0.1% higher to $29.93 per ounce and platinum gained about 1% to $986.60. Both the metals are headed for a weekly gain.

Palladium climbed 0.16% to $1,048.06 and was headed for the best week since Dec. 11, 2023, fuelled by export curb concerns.

Russian President Vladimir Putin said on Wednesday that Moscow should consider limiting exports of uranium, titanium and nickel in retaliation against the West.

(Reporting by Daksh Grover, additional reporting by Ashitha Shivaprasad in Bengaluru; Editing by Sherry Jacob-Phillips)