PRECIOUS-Gold firms on rate-cut bets, US inflation data in focus

By Brijesh Patel

Sept 10 (Reuters) - Gold prices rose on Wednesday, holding above the critical $3,600-per-ounce level, buoyed by expectations of a U.S. interest rate cut this month, while key inflation reports due this week were also on investors' radar.

Spot gold XAU= was up 0.5% at $3,644.54 per ounce, as of 0652 GMT, after hitting a record high of $3,673.95 on Tuesday.

U.S. gold futures GCcv1 for December delivery were flat at $3,683.

"Sentiment is really bullish. There are several major factors driving gold prices right now. The primary is U.S. rate cut expectations," Capital.com financial market analyst Kyle Rodda said.

"The near-term outlook depends a lot on this inflation data. If it comes out a bit spicy, then rate cuts could come out of the curve marginally and spark a pullback in what's a technically overbought market."

The U.S. producer price inflation data, due at 1230 GMT, and the consumer price inflation reading on Thursday will be closely watched for more cues on the Federal Reserve's interest rate trajectory.

The U.S. economy likely created 911,000 fewer jobs in the 12 months through March than previously estimated, the government said on Tuesday, suggesting that job growth was already stalling before President Donald Trump's aggressive tariffs on imports.

U.S. nonfarm payroll data released last week also pointed to weakening labor market conditions, and sealed the case for a rate cut at the Fed's September policy meeting.

Markets are fully pricing in a 25-basis-point rate cut, while the likelihood of a larger 50-basis-point cut stands at around 6%, according to CME Group's FedWatch Tool.

Gold prices have gained 38% so far this year, following a 27% jump in 2024, bolstered by soft dollar, strong central bank accumulation, dovish monetary settings and heightened global uncertainty.

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

Elsewhere, spot silver XAG= rose 0.6% to $41.14 per ounce. Platinum XPT= gained 1.1% to $1,383.90 and palladium XPD= was flat at $1,147.98.

Reuters Terminal users can see related news and prices by clicking on the codes in brackets:
All precious metals headlines           GOL
Precious metals market reports          GOL/
European gold prices                    GOLD/EU1GOLD/EU20#PREC
London Bullion Market Association       LBMA01
New York Comex gold 0#GC: and silver  0#SI:
New York platinum 0#PL: and palladium 0#PA: