PRECIOUS-Gold gains as dollar softens, US shutdown jitters persist

By Pablo Sinha and Noel John

Nov 7 (Reuters) - Gold prices rose on Friday as the dollar softened and uncertainty around the U.S. government shutdown added to safe-haven demand, while Wall Street indexes were set for sharp weekly declines.

Spot gold XAU= was up 0.2% at $3,986.83 per ounce, as of 09:37 a.m. ET (1437 GMT). But the contract has fallen 0.4% so far this week.

U.S. gold futures GCcv1 for December delivery gained 0.1% to $3,993.60 per ounce.

Tech-heavy stock markets remained poised for their biggest weekly fall in seven months on Friday, as investors fretted over the sustainability of a rally in artificial intelligence stocks. MKTS/GLOB

The U.S. dollar .DXY eased, making greenback-priced bullion cheaper for other currency holders. USD/

"The recent price action technically suggests we may be putting in a floor underneath gold and silver prices," said Jim Wyckoff, senior analyst at Kitco Metals.

Gold is considered a hedge during uncertainty, and as a non-yielding asset, tends to benefit in low-interest rate environments.

With the U.S. government shutdown delaying the release of the monthly non-farm payrolls report, traders turned to private sector data, which showed job losses in October, to gauge the likelihood of another Federal Reserve interest rate cut this year.

Markets now see a 67% chance of a 25-basis-point rate cut in December, according to CME Group's FedWatch tool.

Meanwhile, China has started designing a new rare earth licensing regime that could speed up shipments, though it is unlikely to fully lift restrictions as Washington had hoped, industry insiders said.

"Even though the waves in trade policy have calmed down somewhat, the conflicts are by no means resolved. Gold is therefore likely to remain in demand as a safe haven," Commerzbank said in a note.

Elsewhere, spot silver XAG= climbed 0.6% to $48.26 per ounce. Platinum XPT= fell 0.5% to $1,533.10 and palladium XPD= held steady at $1,374.75. All three are headed for weekly losses.