By Anjana Anil

(Reuters) - Gold prices surged to another record high on Friday as data showing a rise in the U.S. unemployment rate boosted expectations that the U.S. Federal Reserve could begin cutting interest rates soon.

Spot gold rose 0.5% to $2,170.55 per ounce by 2:07 p.m. ET (1907 GMT). U.S. gold futures settled 0.9% higher to $2,185.50.

Bullion was set to post its biggest weekly percentage increase since mid-October.

Gold reached an all-time high of $2,185.19 after a report showed a rise in the U.S. unemployment rate and a moderation in wage gains despite job growth acceleration in February.

"We still believe the same underlying premise remains, which is the combination of the expectation that the Fed is still going to cut rates later this year and dollar weakness," said David Meger, director of metals trading at High Ridge Futures.

The dollar index was 0.1% lower, making gold cheaper for overseas buyers, while the yield on the 10-year U.S. Treasury fell to a more than one-month low. [USD/]

Traders boosted bets the Fed could start cutting interest rates in May to around 30% after the jobs report, although June remained the mostly likely scenario at 73%.

Gold began its record run on Tuesday when it surpassed its December peak, primarily aided by growing indications of cooling price pressures and its traditional safe-haven appeal.

Low interest rates are supportive for gold prices as they reduce the opportunity cost of holding bullion.

"This (jobs) report will be seen as one that keeps the Fed on course for June. Gold prices will continue to trend higher overall, though a short consolidation may be necessary," said Tai Wong, a New York-based independent metals trader.

Meanwhile, London's gold price benchmark hit another record high of $2171.30 per troy ounce at an afternoon auction on Friday, the London Bullion Market Association (LBMA) said.

Spot silver eased 0.3% to $24.25, while platinum was down 0.9% to $910.10 per ounce, and palladium lost 1.8% to $1,015.50. All the three metals were set for weekly gains.

(Reporting by Anjana Anil and Brijesh Patel in Bengaluru; Editing by Kirsten Donovan, Shinjini Ganguli and Shounak Dasgupta)