PRECIOUS-US rate cut, geopolitical woes lift gold to record high

* Bullion hit a record high level of $2,630.93 * Hezbollah and Israel exchanged heavy fire on Sunday * US PCE due on Friday (Updates prices and graphics) By Daksh Grover Sept 23 (Reuters) - Gold extended gains to scale a record high on Monday, driven by the momentum generated by the Federal Reserve's interest rate cut and safe-haven demand due to geopolitical risks in the Middle East. Spot gold XAU= was up 0.2% to $2,628.25 per ounce as of 0524 GMT, after hitting a record high of $2,630.93 earlier in the session. Non-yielding gold is up over 27% so far this year, heading for its biggest annual rise since 2010. U.S. gold futures GCcv1 gained 0.3% to $2,653.00. "The current state of play in the global economy, which consists of declining interest rates, seemingly ever-present geopolitical risks and an upcoming U.S. election has suited gold to a tee," said Tim Waterer, chief market analyst at KCM Trade. "If the Fed stays committed to its rate-cutting cycle in the coming months, then any pullback in gold will likely have buyers waiting in the wings, with investors potentially eyeing off some better entry points." The Fed began its easing cycle last week with a half-percentage point rate cut, and forecast another half-point cut by year-end and a full point next year. Fed futures traders have priced in 75 basis points in rate cuts by the end of this year, according to CME FedWatch. Lower rates reduce the opportunity cost of holding bullion, which is also viewed as a safe asset amid economic and political turmoil. Elsewhere, Hezbollah and Israel exchanged heavy fire into Sunday, with the Lebanese militant group launching rockets deep into northern Israel amid intense bombardment, marking one of the most significant escalations in nearly a year of conflict. For this week, traders will be looking forward to comments from Fed officials and U.S. PCE inflation data due on Friday, for further policy hints. Spot silver XAG= edged 0.2% lower to $31.05 per ounce, platinum XPT= fell 0.4% to $971.05 and palladium XPD= shed over 1% to $1,056.55. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Spot gold price in USD per oz https://reut.rs/47FHfcO ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Daksh Grover in Bengaluru; Editing by Sherry Jacob-Phillips, Mrigank Dhaniwala and Varun H K) (([email protected];))