PRECIOUS-Gold slips as dollar firms on Fed rate caution

By Brijesh Patel

Oct 31 (Reuters) - Gold prices slipped on Friday, as the dollar firmed on uncertainty over further Federal Reserve rate cuts, although the bullion was still set for its third consecutive monthly gain.

Spot gold XAU= was down 0.3% at $4,011.60 per ounce, as of 0700 GMT. Bullion has gained 4% so far this month.

U.S. gold futures GCcv1 for December delivery rose 0.1% to $4,021.20 per ounce.

"The Fed Chairman did have his hawkish cap on this week, which didn't do gold any favours," said KCM Trade's Chief Market Analyst Tim Waterer.

"The prospect of a rate cut in December now looks like it could be much more of a toss-up than was previously thought, which has boosted the dollar while making things a bit more complicated for gold from a yield perspective."

The dollar index .DXY held near its highest level in three months against its rivals, making bullion more expensive for other currency holders. USD/

On Wednesday, the Fed cut interest rates by 25 basis points for the second time this year, taking the benchmark overnight rate to a target range of 3.75%–4.00%.

Traders scaled back bets of another rate cut at its next policy meeting in December after Chair Jerome Powell's remarks.

Markets now price in a 74.8% probability of a 25-bp cut compared with 91.1% chance a week ago, according to CME Group's FedWatch tool.

On Thursday, U.S. President Donald Trump said he had agreed to trim tariffs on China in exchange for Beijing cracking down on the illicit fentanyl trade, resuming U.S. soybean purchases and keeping rare earths exports flowing.

Meanwhile, gold was sold at a discount this week in India for the first time in seven weeks, while a pullback in prices lifted activity in other Asian hubs.

Elsewhere, spot silver XAG= was up 0.4% at $49.1 per ounce, platinum XPT= gained 0.6% to $1,621.60 and palladium XPD= climbed 1.2% to $1,462.43.

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