PRECIOUS-Gold rises on weaker dollar as investors brace for US data

By Pablo Sinha

Dec 5 (Reuters) - Gold gained on Friday, supported by a softer dollar and growing bets on a U.S. interest rate cut, with markets focused on upcoming U.S. inflation data ahead of the Federal Reserve’s policy meeting next week.

Spot gold XAU= rose 0.4% to $4,225.11 per ounce, as of 1017 GMT, but was on track for a 0.1% weekly decline.

U.S. gold futures GCcv1 for February delivery edged 0.3% higher to $4,255.90 per ounce.

The dollar .DXY was languishing not far from a five-week low against major peers, making gold more affordable for holders of other currencies. US/USD/

"Gold remains somewhat buoyed by market bets that the Fed will cut rates next week and a weaker dollar," said Lukman Otunuga, senior research analyst at FXTM.

Data on Wednesday showed that private payrolls fell by 32,000 in November, the sharpest drop in more than 2-1/2 years, while new U.S. unemployment benefit applications dropped to the lowest level in more than three years, weekly data showed on Thursday.

A majority of more than 100 economists polled by Reuters forecast the Fed will reduce its key interest rate by 25 basis points at its December 9-10 meeting.

Lower interest rates tend to favour non-yielding assets such as gold.

Investors are eyeing the delayed September PCE inflation data due later today, which will mark the final data release before next week’s FOMC meeting.

Meanwhile, silver XAG= rose 1.9% to $58.19 an ounce, up 3.1% for the week after touching a record $58.98 on Wednesday.

"Silver is on track for a second weekly gain thanks to strong inflows into exchange-traded funds," while rate cut expectations and a softer dollar have also powered the upside, Otunuga added.

Silver has surged about 101% so far this year, driven by a structural supply deficit, liquidity concerns and its addition to the U.S. critical minerals list.

Platinum XPT= added 0.7% to $1,657.50 and was set for a small weekly gain, while palladium XPD= gained 1.2% to $1,466.54 but was poised to end the week lower.