Gold prices rose on Thursday, extending gains from 2024 as investors weighed potential shifts in the US Federal Reserve's interest rate outlook in the face of President-elect Donald Trump's proposed tariffs and their likely impact on inflation.

Spot gold rose 0.6 percent to $2,638 an ounce by 0930 GMT, having gained 0.7 percent on the last trading day of 2024. US gold futures edged up by 0.4 percent to $2,651.

"In my opinion, political and economic risks, non-dollar and yield-sensitive demand from de-dollarising central banks and investors seeking a hedge against fiscal instability, as well as sticky inflation, will support another year of gains for gold," said Ole Hansen, head of commodity strategy at Saxo Bank.

In 2024 the Fed's rate-easing cycle, robust central bank purchases and mounting geopolitical tensions propelled bullion to multiple record highs and a 27 percent annual gain, its biggest since 2010.

"Over the next month the market will be focusing on new year flows from asset allocators and where they go, as well as Trump and more details about his policies, some of which are likely to end up being gold-friendly," Hansen said, adding that a gold price target of $3,000 an ounce looks likely.

Donald Trump will be sworn in as president of the United States on Jan. 20. His proposed tariffs and protectionist trade policies are expected to be inflationary and could spark trade wars, adding to gold's allure as a safe-haven asset.

With inflation above its 2 percent target, traders expect the Fed to employ a cautious approach to interest rate cuts in 2025.

Investors are also awaiting a slew of US economic data next week to further gauge the interest rate outlook for 2025.