PRECIOUS-Gold pares gains as weekly jobless claims fall, investors eye key inflation report

By Sherin Elizabeth Varghese

Sept 25 (Reuters) - Gold pared earlier gains on Thursday after U.S. weekly jobless claims unexpectedly declined, while investors awaited key inflation data that could shape the Federal Reserve's next interest rate moves.

Spot gold XAU= was up 0.1% at $3,739.42 per ounce, as of 01:41 p.m. EDT (1741 GMT) after rising as much as 0.6% earlier in the session. Prices hit a record high of $3,790.82 on Tuesday.

U.S. gold futures GCcv1 for December delivery settled 0.1% higher at $3,771.1.

The number of Americans filing new applications for unemployment benefits fell last week, but the labor market has lost its luster amid an anemic pace of hiring. Meanwhile, the U.S. economy grew faster than previously thought in the second quarter.

"Jobless claims came in at 218,000 versus expectations of 235,000, a slightly hawkish print that may temper some (rate)easing expectations, but it's not enough to alter the overall trend," said Peter Grant, vice president and senior metals strategist at Zaner Metals.

"The biggest short-term risk for gold is a hotter-than-expected PCE reading. If inflation surprises on the upside, it could boost the dollar and weigh on gold temporarily."

Friday's personal consumption expenditures (PCE) price index, the Fed's preferred inflation measure, is expected to show a 0.3% month-on-month increase for August and a 2.7% year-on-year rise, as per a Reuters poll.

San Francisco Fed Bank President Mary Daly reiterated her "full support" for last week's 25-basis-point rate cut and signaled openness to additional reductions. In contrast, Fed Chair Jerome Powell maintained a more cautious stance on Tuesday.

Safe-haven bullion tends to thrive in a low-interest rate environment.

Among other metals, spot silver XAG= rose 2.2% to $44.87 per ounce, its highest level in over 14 years.

Platinum XPT= gained 3.5% to $1,524.15, climbing to its highest since September 2013, while palladium XPD= rose 3.6% to $1,254.04.