PRECIOUS-Gold poised for monthly gain on soft dollar, US rate cut hopes

By Brijesh Patel

Aug 29 (Reuters) - Gold prices were on track for a monthly rise on Friday, supported by a softer dollar and increased expectations for a U.S. interest rate cut in September.

Spot gold XAU= was down 0.2% at $3,411.29 per ounce, as of 0704 GMT, on profit-taking. Bullion gained 3.7% so far this month and hit $3,423.16, its highest level since July 23, on Thursday.

U.S. gold futures GCcv1 for December delivery eased 0.1% to $3,470.80.

The dollar .DXY was set for a monthly drop, making the greenback-priced gold less expensive for holders of other currencies. USD/

"The precious metal remains a popular pick with investors ahead of what is expected to be a period of looser monetary policy in the U.S. starting next month," said KCM Trade chief market analyst, Tim Waterer.

Federal Reserve Governor Christopher Waller on Thursday stepped up his call for cutting short-term U.S. borrowing costs, saying he would support an interest-rate cut next month and further reductions over the next three to six months.

Traders say there is an 86% chance of a 25-basis-point rate cut at the Fed's policy meeting next month, according to the CME FedWatch Tool.

Non-yielding gold typically performs well in a low-interest-rate environment.

Investors are now awaiting the release of the Personal Consumption Expenditures (PCE) Price Index in the U.S., the Fed's preferred inflation measure, due later in the day, for further cues on the Fed's interest rate trajectory.

"If we see core PCE come in steady at 0.3% for the month, this will keep things on track as far as expected rate cuts from the Fed is concerned," Waterer said.

Meanwhile, Fed Governor Lisa Cook filed a lawsuit on Thursday claiming U.S. President Donald Trump has no power to remove her from office.

Elsewhere, spot silver XAG= fell 0.6% to $38.82 per ounce, platinum XPT= fell 1.2% to $1,343.80 and palladium XPD= was down 0.4% to $1,097.73.

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