Gold climbs to near two-week high on reinforced US rate cut bets

• 85% chance of December rate cut - CME FedWatch
• Data show US retail sales for Sep slow, producer prices up 2.7%
• Fed's system of managing rates struggling - US Treasury Secretary

By Ishaan Arora

Nov 26 (Reuters) - Gold climbed to a near two-week high on Wednesday, after U.S. economic data bolstered expectations of an interest rate cut by the Federal Reserve in December and weighed on the dollar.

Spot gold XAU= rose 0.7% to $4,160.12 per ounce, as of 0437 GMT, its highest since November 14. U.S. gold futures GCcv1 for December delivery were up 0.4% at $4,158.00 per ounce.

"Expectations are now being shaped more towards a December rate cut occurring ... the case for which has been strengthened by a chorus of dovish remarks from Fed officials and benign economic data, which is boosting gold from a yield perspective," said KCM Trade Chief Market Analyst Tim Waterer.

Data showed Tuesday that U.S. retail sales increased less than expected in September, and 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.

The dollar touched a one-week low as investors wagered that the reported leading candidate for the next Fed chair, Kevin Hassett, may guide policy in a more dovish direction, making greenback-priced bullion less expensive for other currency holders. USD/

The benchmark 10-year Treasury yields US10YT=RR held near one-month lows hit in the previous session. US/

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.

Markets are pricing in an 85% chance of a Fed rate cut in December, compared to 50% last week, according to CME FedWatch tool data. FEDWATCH

Gold, a non-yielding asset, tends to perform well in low-interest-rate environments.

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

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

Among other metals, spot silver XAG= rose 1.1% to $51.96 per ounce, platinum XPT= was flat at $1,553.95, and palladium XPD= kept steady at $1,397.43.