PRECIOUS-Gold drifts higher after data supports US rate-cut bets

Oct 11 (Reuters) - Gold prices edged higher on Friday after recent data supported bets for a Federal Reserve interest rate cut next month, while market participants focussed on the U.S. Producer Price Index (PPI) report for further direction.

FUNDAMENTALS

* Spot gold rose 0.3% to $2,636.13 per ounce by 0153 GMT but was down about 0.6% for the week. U.S. gold futures rose 0.5% to $2,653.40.

* The dollar index fell from two-month highs. A weaker dollar makes bullion more attractive for other currency holders.

* Data on Thursday showed that U.S. consumer prices rose slightly more than expected in September, while jobless claims increased to 258,000 in the week ended Oct. 5, versus estimates of 230,000. All eyes are now on the PPI data due at 1230 GMT.

* Markets currently see an 83% chance of a 25-basis-point rate reduction in November and a 17% probability that the Fed will keep rates on hold, according to CME's FedWatch.

* Lower interest rates reduce the opportunity cost of holding bullion.

* New York Fed President John Williams said the timing and pace of rate cuts will depend on data, but "based on my current forecast for the economy, I expect that it will be appropriate to continue the process of moving the stance of monetary policy to a more neutral setting over time."

* Elsewhere, Gulf states are lobbying Washington to stop Israel from attacking Iran's oil sites because they are concerned their own oil facilities could come under fire from Tehran's proxies if the conflict escalates, three Gulf sources told Reuters.

* Spot silver edged 0.1% higher to $31.21 per ounce. Platinum climbed 0.7% to $974.20, while palladium inched up 0.8% to $1,077.70.

DATA/EVENTS (GMT)

0300 China Overall Comprehensive Risk Q4

0300 Japan Overall Comprehensive Risk Q4

0600 Germany HICP Final YY Sept

0600 UK GDP Est 3M/3M Aug

0600 UK GDP Estimate MM Aug

0600 UK GDP Estimate YY Aug

0600 UK Services MM Aug

0600 UK Services YY Aug

0600 UK Manufacturing Output MM Aug

1230 US PPI Machine Manuf'ing Sept

1400 US U Mich Sentiment Prelim Oct

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Subhranshu Sahu)