Oct 7 (Reuters) - Gold prices eased on Monday as the U.S. dollar held strong and recent employment data prompted investors to scale back expectations of a big rate cut from the Federal Reserve in November.
Spot gold fell 0.2% to $2,648.21 per ounce by 1:51 p.m. ET (1751 GMT), off a record peak of $2,685.42 hit on Sept. 26.
U.S. gold futures settled 0.1% lower at $2,666.00.
The U.S. dollar (.DXY), opens new tab hovered at its highest level in seven weeks, making greenback-priced bullion more expensive for other currency holders.
"The dollar strength is the short-term headwind at this point that's preventing new all time highs for gold," said Peter A. Grant, vice president and senior metals strategist at Zaner Metals.
"I still see short-term potential to $2,700 and the longer-term objective at $3,000 remains valid due to safe-haven demand from geopolitical tensions and political uncertainty as we get closer to the U.S. election."
Bullion is considered a hedge against geopolitical and economic uncertainties and tends to thrive in a low interest rate environment.
Traders now see an 86% probability that the Fed will cut rates by only a quarter of a percentage point next month after a U.S. employment report last week reinforced the belief the economy is unlikely to need the Fed to deliver large interest rate cuts for the rest of this year.
The market will now scan through minutes of the Fed's last policy meeting, and the U.S. Consumer Price Index (CPI) and Producer Price Index (PPI) data this week.
Elsewhere, China's central bank held back on buying gold for its reserves for a fifth straight month in September.
With gold prices near record highs, China may hold back on further accumulation in the short-term but the broader trend to load up on the metal could continue, IG market strategist Yeap Jun Rong said.
Spot silver fell 1.2% to $31.78 and platinum lost 1.2% to $975.72, while palladium rose 1.4% to $1,026.47.
Reporting by Anushree Mukherjee and Ashitha Shivaprasad in Bengaluru; Editing by Shailesh Kuber
