PRECIOUS-Gold drifts higher on US rate cut expectations

Nov 26 (Reuters) - Gold prices nudged higher during early Asian trade on Wednesday, driven by optimism over a possible December interest rate cut by the Federal Reserve.

FUNDAMENTALS

Spot gold XAU= was up 0.2% at $4,136.59 per ounce, as of 0054 GMT. U.S. gold futures GCcv1 for December delivery fell 0.1% to $4,134.00 per ounce.

Markets are pricing in an 84% chance of a Fed rate cut next month, compared to 50% last week, according to CME Group data.

Data on Tuesday showed that U.S. retail sales increased less than expected in September. A separate report showed that, in the 12 months through September, the Producer Price Index increased 2.7% after advancing by the same margin in August.

The data came on the heels of recent dovish remarks from Fed policymakers, reinforcing expectations for a rate cut.

Meanwhile, U.S. Treasury Secretary Scott Bessent said on Tuesday the Fed's system of managing interest rates is struggling and needs to be simplified.

Gold, a non-yielding asset, tends to perform well in a low-interest-rate environment and during periods of geopolitical uncertainty.

On the geopolitical front, a negative factor for prices was President Volodymyr Zelenskiy's statement that Ukraine was ready to advance a U.S.-backed framework to end the war with Russia and discuss disputed points with U.S. President Donald Trump in talks he said should include European allies.

The U.S. weekly jobless claims report is scheduled for release later on Wednesday.

Top consumer China's net gold imports via Hong Kong in October fell about 64% from September, data showed.

Among other metals, spot silver XAG= slipped 0.1% to $51.36 per ounce, platinum XPT= lost 1% to $1,538.00, and palladium XPD= lost 1.1% to $1,382.24.