Sept 19 (Reuters) - Gold prices rose over 1% on Thursday as the U.S. Federal Reserve launched its monetary easing cycle with a half percentage point move, boosting bullion to an all-time high and just a few cents shy of the key $2,600 ceiling in the previous session.

Spot gold rose 1.2% to $2,590.47 per ounce by 2:02 p.m. ET (1802 GMT).

U.S. gold futures settled 0.6% higher at $2,614.60. Spot prices scaled a record high of $2,599.92 on Wednesday after the Fed lowered the benchmark policy rate by 50 basis points to 4.75%-5.00%.

Fed policymakers also projected the benchmark interest rate would fall by another half of a percentage point by the end of this year, a full percentage point next year, and half of a percentage point in 2026.

"The market is factoring in bigger and more rate cuts because we have both fiscal and trade deficits, and that's going to further weaken the overall value of the dollar," said Alex Ebkarian, chief operating officer at Allegiance Gold.

"If you combine geopolitical risks with the current deficit that we have, along with the low yielding environment and weaker dollar, the combination of all these is what's leading to gold's rally."

Monetary policy easing by global banks, along with robust central bank buying and geopolitical concerns have fuelled a rally in gold prices to record highs multiple times this year.

Bullion is considered a safe asset during political and economic uncertainty. It also tends to thrive in a low-rate environment.

"This rally could go further, in our view. We target $2,700/oz by mid-2025. Alongside the near-term risk drivers, we anticipate greater gold ETF demand to gather pace in the coming months," UBS said in a note.

Elsewhere, spot silver rose 3.5% to $31.11 per ounce.

"We maintain our view that silver is set to benefit from a rising gold price environment," UBS added.

Platinum rose 2.3% to $990.45 and palladium gained 2.6% to $1,089.25.