Gold prices edged higher on Friday, poised for a fifth consecutive weekly gain, following the U.S. Federal Reserve's first rate cut of the year, while investors awaited further signals on the U.S. policy outlook.

Spot gold was up 0.2% at $3,650.89 per ounce as of 0817 GMT. Bullion is up 0.2% so far this week.

U.S. gold futures for December delivery rose 0.1% to $3,683.40.

"The Fed policy outlook remains the primary driving force for bullion bugs, even as the precious metals enjoys tremendous support from central bank purchases and safe haven demand; any dips below $3,600 are bound to be short-lived," said Han Tan, chief market analyst at Nemo.money.

The Fed cut its key interest rate by 25 basis points on Wednesday and opened the door to further easing, but tempered its message with warnings of sticky inflation, sowing doubt over the pace of future easing.

Fed Chair Jerome Powell characterised the policy action as a risk-management cut in response to the weakening labour market and said the central bank was in a "meeting-by-meeting situation" regarding the rate outlook.

Traders are pricing in a 92% chance of another 25-bp cut at the Fed's October meeting, according to the CME Group's FedWatch tool.

"Key things that are driving gold prices is the continued dollar depreciation as year to date it has been very strong and we believe the pattern to continue," said Nitesh Shah, commodities strategist at WisdomTree.

"Gold prices are well positioned for a significant gain, and we expect this time next year gold prices to be trading around $4,300."

Non-yielding bullion, which tends to perform well in low-interest-rate environment, hit a record high of $3,707.40 on Wednesday and has risen about 39% year-to-date.

Physical gold premiums in India rose to a 10-month high this week as record prices near a festive season failed to deter investors from buying bullion in anticipation of further gains.

Elsewhere, spot silver rose 0.8% to $42.12 per ounce, platinum edged up 0.2% to $1,386.65 while Palladium was down 0.4% at $1,146.43. All three metals were headed for weekly loss.

Source : Reuters