PRECIOUS-Gold eases off two-week peak as dollar ticks up

By Brijesh Patel

Aug 25 (Reuters) - Gold slipped from a near two-week high on Monday as the dollar strengthened, although rising bets of interest rate cuts by the U.S. Federal Reserve following Chair Jerome Powell's dovish pivot last week, lent some support to bullion.

Spot gold XAU= inched down 0.1% at $3,367.86 per ounce, as of 0632 GMT, after hitting its highest since August 11 on Friday.

U.S. gold futures GCcv1 for December delivery eased 0.2% to $3,412.50.

The dollar index .DXY rose 0.1% against its rivals after dropping to a four-week low, making gold less attractive to overseas buyers. USD/

"There's a decent level of support for gold around $3,350 over the near term, with Powell's dovish hints allowing gold to carve out a prominent swing low on Friday," City Index senior analyst Matt Simpson said.

"A sustained rally likely requires softer PCE inflation and weaker employment data going forward. But with inflation likely to remain elevated, gold's gains could remain capped beyond the expected initial bounce."

Powell on Friday signalled a possible rate cut at the Fed's meeting next month, saying that risks to the job market were rising but inflation remained a threat, and that a decision wasn't set in stone.

Markets are now pricing in an 87% chance of a quarter-point rate cut in the September policy meeting, and a cumulative reduction of 48 basis points by this year-end, according to CME FedWatch Tool.

Gold tends to appreciate in a low-interest-rate environment, which reduces the opportunity cost of holding non-yielding bullion.

Asian share markets rallied on Monday as investors celebrated the likely resumption of U.S. rate cuts.

Investors now await U.S. personal consumption prices data on Friday, which is expected to show core inflation creeping up to its highest since late 2023 at 2.9%.

Elsewhere, spot silver XAG= rose 0.3% to $38.94 per ounce, platinum XPT= fell 0.2% to $1,359.66 and palladium XPD= was flat at $1,126.41.

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