Gold prices were poised for a second consecutive weekly gain on Friday, driven by safe-haven demand amid tensions in the Middle East and rising bets that the US Federal Reserve might reduce interest rates later this year.

Spot gold was up 0.1 per cent at $2,362.60 per ounce as of 0516 GMT, after hitting a two-week high in the previous session.

Bullion has gained over 1 per cent so far for the week, adding to their 1.7 per cent increase last week.

US gold futures rose 0.3 per cent to $2,376.50 on the day.

“In the short-term perspective, the current movement driver of this bullish going gold is primarily driven by rising geopolitical tensions, especially after the news on the attack on Gaza,” said Kelvin Wong, a senior market analyst for Asia Pacific at OANDA.

On Thursday, several Israeli air strikes in the Gaza Strip killed at least 14 people and wounded dozens of others.

“The market is now looking for what is the possibility of another (US) rate cut after September, which could be supportive of gold, keeping it above that $2,300 level,” said Wong.

Data on Thursday showed first-time applications for US unemployment benefits fell moderately last week, while new housing construction dropped.

This, along with tepid retail sales last month, keeps the chance of a September rate cut on the table.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion.