PRECIOUS-Gold inches higher as soft US PPI data fuels rate cut bets; CPI in focus

Sept 11 (Reuters) - Gold edged up on Thursday, as softer-than-expected U.S. producer price index (PPI) data reinforced already strong expectations for a Federal Reserve interest rate cut next week, while investors awaited key consumer inflation data for further cues.

FUNDAMENTALS

* Spot gold XAU= was up 0.1% at $3,645.04 per ounce, as of 0044 GMT. Bullion hit a record high of $3,673.95 on Tuesday.

* U.S. gold futures GCcv1 for December delivery rose 0.1% to $3,682.90.

* U.S. producer prices unexpectedly fell in August due to lower trade services margins and modest increases in goods costs.

* Investors are now focused on U.S. Consumer Price Index (CPI) data, with a Reuters poll forecasting a 0.3% monthly increase in August after a 0.2% rise in July. CPI is expected to have grown 2.9% year-on-year, compared with 2.7% in July.

* The Federal Reserve is expected to cut interest rates at its policy meeting next Wednesday, with a quarter-percentage-point reduction fully priced in, while investors anticipate slim possibility of 50-basis-point cut, as per CME FedWatch tool.

* Last week's weaker-than-expected nonfarm payrolls report, which pointed to a cooling labor market, further strengthened expectations of monetary easing.

* Gold, which does not yield interest, tends to perform well in low-interest-rate environments.

* Meanwhile, on Wednesday, the U.S. President Donald Trump's administration appealed a federal judge's ruling that temporarily blocked the dismissal of Fed Governor Lisa Cook.

* Stephen Miran, a top White House economic adviser, moved closer to becoming a Fed governor on Wednesday, furthering Trump's efforts to exert greater influence over the central bank.

* Poland shot down suspected Russian drones in its airspace on Wednesday with the backing of aircraft from its NATO allies, the first time a member of the Western military alliance is known to have fired shots during Russia's war in Ukraine.

* Elsewhere, spot silver XAG= was steady at $41.13 per ounce. Platinum XPT= gained 0.5% to $1,392.55 and palladium XPD= rose 0.7% to $1,181.56.