PRECIOUS-Gold takes a breather as focus turns to US inflation data

Sept 10 (Reuters) - Gold prices were flat on Wednesday, as investors awaited key inflation reports due later this week, while expectations of a U.S. interest rate cut this month helped keep bullion above the critical $3,600-per-ounce level.

FUNDAMENTALS

* Spot gold XAU= held its ground at $3,624.39 per ounce, as of 0101 GMT, after hitting a record high of $3,673.95 on Tuesday.

* U.S. gold futures GCcv1 for December delivery slipped 0.5% to $3,662.30.

* The dollar index .DXY extended its gains against rival currencies, rebounding from a seven-week low hit in the previous session and making gold more expensive for other currency holders.

* U.S. 10-year Treasury yields edged higher from a five-month low. US/ USD/

* Focus now shifts to U.S. producer price inflation data, due later in the day, followed by consumer price inflation reading on Thursday for more cues on the Federal Reserve's interest rate trajectory.

* The U.S. economy likely created 911,000 fewer jobs in the 12 months through March than previously estimated, the government said on Tuesday, suggesting that job growth was already stalling before U.S. President Donald Trump's aggressive tariffs on imports.

* U.S. nonfarm payroll data released last week also pointed to weakening labor market conditions and sealing the case for a Fed rate cut next week.

* Markets are fully pricing in a 25-basis-point rate cut next week, while the likelihood of a larger 50-basis-point cut stands at around 8%, according to CME Group's FedWatch Tool.

* Non-yielding gold typically performs well in a low-interest-rate environment.

* Gold prices have gained 38% so far this year, following a 27% jump in 2024, bolstered by soft dollar, strong central bank accumulation, dovish monetary settings and heightened global uncertainty.

* Elsewhere, spot silver XAG= fell 0.3% to $40.77 per ounce. Platinum XPT= gained 0.2% to $1,370.44 and palladium XPD= slipped 0.8% to $1,138.817.

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