Gold hits two-week peak on increased Fed rate-cut bets

Nov 28 (Reuters) - Gold prices rose to a two-week high in early Asian trade on Friday, as bets increased for a U.S. interest rate cut next month amid conflicting signals from Federal Reserve officials.

FUNDAMENTALS

Spot gold XAU= rose 0.6% to $4,180.89 per ounce by 0100 GMT, hitting its highest level since November 14, and was set for a 3% weekly gain. U.S. gold futures GCcv1 for December delivery were up 0.3% at $4,215.80 per ounce.

U.S. rate futures are pricing in an 87% chance of a rate cut in December, compared with 85% a day prior, according to the CME's FedWatch tool.

Comments from San Francisco Federal Reserve Bank President Mary Daly and Fed Governor Christopher Waller this week have bolstered expectations for a rate cut.

Their stance, however, contrasted with several regional Fed presidents advocating a pause until inflation shows a more convincing move towards the 2% target.

Meanwhile, Kevin Hassett, who has emerged as a front runner to replace Jerome Powell as Fed Chair, like U.S. President Donald Trump, has said interest rates should be lower.

Non-yielding gold tends to perform well in low-interest-rate environments.

Trading was thin with U.S. markets closed on Thursday for the Thanksgiving holiday.

The U.S. dollar was headed for its steepest weekly drop in four months in the previous session as investors bet on further monetary easing, amid pressure from President Trump to cut rates. USD/

Elsewhere, spot silver XAG= rose 0.2% to $53.53 per ounce and platinum XPT= gained 0.6% to $1,617.15, with both up 7.4% for the week. Palladium XPD= lost 0.2% to $1,435.83 but was set for a 4% weekly gain.