PRECIOUS-Gold erases gains after US data cements Fed's hawkish stance

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Fed projects fewer rate cuts in 2025

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Gold hits lowest since Nov. 18 earlier in the session

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Investors await US PCE data due on Friday

(Updates with U.S. morning hours)

By Sherin Elizabeth Varghese

Dec 19 (Reuters) - Gold prices traded around flat on Thursday, erasing earlier gains after U.S. data reinforced market expectations the Federal Reserve will take a cautious approach to policy easing in the year ahead.

Spot gold edged up 0.1% at $2,589.43 per ounce as of 10:30 a.m. ET (1149 GMT) and U.S. gold futures fell 1.9% to $2,603.60.

Data earlier showed the U.S. economy growing faster than expected in the third quarter, while jobless claims also fell more than anticipated.

"With these GDP prints and the jobless claims, it's showing that the data is fairly firm," said Bart Melek, head of commodity strategies at TD Securities, adding that a solid economy and inflationary risks, including tariffs and spending cuts, reaffirm the Fed has little reason to be aggressive, which historically has not been good for non-yielding gold.

Gold slipped more than 2% to a one-month low earlier in the session after Fed officials dialed back projections for future easing given stubborn inflation.

The drop attracted investors to buy, sending prices as much as 1.5% higher earlier in the session.

"The short-term dip in gold presented a good buy-in opportunity for long-term stackers. You have the looming debt problem, the potential government shutdown, and we're already seeing the posture of the new administration in terms of trying to cut the expenses and minimise the deficits," said Alex Ebkarian, chief operating officer at Allegiance Gold.

U.S. President-elect Donald Trump's pre-inauguration push to sway Congress threatens to complicate efforts to avoid a government shutdown, potentially disrupting services such as air travel and law enforcement ahead of the holidays.

Gold is considered a safe investment option during economic and geopolitical turmoil and tends to thrive in a low-interest-rate environment.

Investors await Friday's release of core PCE data, the Fed's preferred inflation measure, for further clues on the economic outlook.

Spot silver fell 1.9% to $28.80 per ounce, platinum added 0.2% at $921.45 and palladium rose 0.2% to $905.10.

(Reporting by Sherin Elizabeth Varghese in Bengaluru, additional reporting by Swati Verma; editing by Barbara Lewis)