Sept 9 (Reuters) - Gold continued its record rally on Tuesday, buoyed by expectations of an imminent September U.S. interest rate cut, while investors looked ahead to inflation data due this week.
Spot gold was up 0.2% at $3,643.57 per ounce, as of 0212 p.m. ET (18:12 GMT), after hitting a record high of $3,673.95 earlier in the session.
U.S. gold futures for December delivery settled 0.1% higher at $3,682.2.
"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 pricing in a 92% chance of a 25-basis-point rate cut next week, with some also betting on a larger 50-basis-point move, as per the CME FedWatch tool, opens new tab.
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.
The dollar index (.DXY), rose, but hovered near a seven-week low against rivals, while benchmark U.S. 10-year Treasury yields also rose after reaching five-month lows earlier.
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 U.S. 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 fell 1.2% lower to $40.86 per ounce. Platinum dropped 1.4% to $1,363.14 and palladium slipped 0.3% to $1,130.61.
Reporting by Anushree Mukherjee and Sarah Qureshi in Bengaluru; Additional reporting by Kavya Balaraman; Editing by Vijay Kishore and Aurora Ellis
