Sept 9 (Reuters) - Gold continued its record rally on Tuesday, as expectations of an imminent September U.S. interest rate cut weighed on the dollar and Treasury yields, while investors looked ahead to inflation data due this week.
Spot gold was up 0.7% at $3,661.09 per ounce, as of 0933 a.m. ET (13:33 GMT), after hitting a record high of $3,666.38 earlier in the session.
U.S. gold futures for December delivery rose 0.7% to $3,701.40.
The dollar index (.DXY), fell to a near seven-week low against rivals, making gold more attractive to other currency holders, while benchmark U.S. 10-year Treasury yields held five-month lows.
"This rally is largely driven by expectations that the Federal Reserve will begin cutting rates, potentially as early as September," said Bart Melek, head of commodity strategies at TD Securities.
Traders are currently widely pricing in a 25-basis-point rate cut next week, with some also betting on a larger 50-basis-point move.
This comes after Friday's data showed U.S. job growth weakened sharply in August. Lower interest rates pressure the dollar and bond yields, raising the appeal of non-yielding bullion.
Investors now await U.S. producer price data on Wednesday and consumer price data on Thursday for further rate cut cues ahead of the Fed's meeting next week.
"If the US economy does a little weaker, that essentially means that we could see more flows into non-standard asset classes like gold to hedge against that potential decline," Melek adds.
Bullion, which surpassed $3,600/oz on Monday, has notched multiple record highs this year, driven by a soft dollar, strong central bank buying, dovish monetary policy and heightened global uncertainty.
"We're very bullish even at $3,600 - we think the markets will continue to rally because we don't see a shift that's going to happen with respect to tariff policy, trade relations (or) geopolitics," said John Ciampaglia, CEO of Sprott Asset Management.
"If any of those things were to improve... I think you would get a pause in the price appreciation of gold."
Elsewhere, spot silver edged 0.3% lower to $41.19 per ounce. Platinum gained 0.2% to $1,385.25, while palladium slipped 0.1% to $1,133.03.
Reporting by Anushree Mukherjee and Sarah Qureshi in Bengaluru; Additional reporting by Kavya Balaraman; Editing by Vijay Kishore
