PRECIOUS-Gold falls on profit-booking; investors eye Fed rate cut signals

By Anmol Choubey

Dec 2 (Reuters) - Gold prices edged lower on Tuesday as investors took profits following a six-week high in the previous session, though expectations of Federal Reserve rate cuts provided underlying support ahead of key U.S. economic data this week.

Spot gold XAU= lost 0.3% to $4,219.96 per ounce by 09:58 a.m. ET (1458 GMT), after falling over 1% earlier in the session.

U.S. gold futures GCcv1 for February delivery were down 0.5% at $4,253.10 per ounce.

"It's probably just a little bit of profit taking... the market's biggest focus of late has been rate cut expectations and those remain pretty steady," said Peter Grant, vice president and senior metals strategist at Zaner Metals.

"We are in a continuation pattern that will eventually lead to an upside breakout and I still like $5,000 gold early in the new year."

Recent data pointing to a gradual cooling of the U.S. economy, coupled with dovish signals from Federal Reserve policymakers, has bolstered market expectations for a 25-basis-point rate cut at the Fed's meeting next week, with traders pricing in an 87% probability of the move FEDWATCH.

Investors are also eyeing November ADP employment report on Wednesday and the delayed September Personal Consumption Expenditures (PCE) Index, due Friday, which is the Fed's preferred inflation gauge. Lower interest rates typically benefit non-yielding gold.

Central banks bought 53 tons of gold in October, up 36% month-on-month and the largest monthly net demand since the start of 2025, according to the World Gold Council.

Silver XAG= retreated from the record high of $58.83 hit on Monday, easing 0.4% to $57.42 per ounce. It has risen over 100% year-to-date.

"There were no new reasons for the recent price jump (in silver). However, the known reasons still apply, namely tight supply, which is reflected in low inventories on the Shanghai exchanges," Commerzbank said in a note, adding they expect a further, albeit moderate, price increase to $59 in the coming year.

Platinum XPT= slipped 2% to $1,624.20, and palladium XPD= gained 0.7% to $1,434.29.