PRECIOUS-Gold firms as inflation data keeps Fed rate cut bets alive

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US PCE matches expectations in August

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Platinum at over 12-year high

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Palladium headed for a weekly gain

(Updates for U.S. morning hours)

By Sherin Elizabeth Varghese

Sept 26 (Reuters) - Gold gained on Friday after U.S. inflation data came in line with expectations, reinforcing bets that the Federal Reserve may continue with interest rate cuts later this year.

Spot gold rose 0.3% to $3,761.41 per ounce as of 9:20 a.m. EDT (1320 GMT), after hitting a record $3,790.82 earlier in the week. The metal has risen 2% this week.

U.S. gold futures for December delivery rose 0.6% to $3,792.

"Monthly PCE data is in line, though personal income and spending were a tenth above expectations. Nothing from this data will prevent the Fed from carrying on with another cautious rate cut at the October meeting," said Tai Wong, an independent metals trader.

Data showed that U.S. Personal Consumption Expenditures (PCE) price index rose 2.7% year-on-year in August, in line with economists' expectations in a Reuters poll.

Investors now see an 88% probability of a rate cut in October and a 64% chance of another in December, according to the CME FedWatch Tool.

Markets will also watch remarks from Richmond Fed President Thomas Barkin and Fed Vice Chair Michelle Bowman later in the day for clues on the Fed's stance.

Gold, a traditional safe haven, typically benefits from lower interest rates.

On the trade front, President Donald Trump announced a fresh round of tariffs on imported drugs, trucks and furniture, effective October 1.

Among other metals, spot silver rose 0.5% to $45.46 per ounce, hitting an over 14-year high, while palladium gained 1.3% to $1,266.50, putting it on track for a weekly gain.

Platinum rose 1.2% to $1,547.42, its highest in more than 12 years.

Analysts and traders note that silver and platinum are gaining momentum amid elevated gold prices, with investors turning to more affordable alternatives.

"Chinese President Xi's pledge to cut net Chinese carbon emissions by 7-10% by 2035 has also spurred buying of silver which is used in solar cells," Wong said.

He noted that sentiment was further supported by Freeport's force majeure at the Grasberg copper mine. (Reporting by Sherin Elizabeth Varghese in Bengaluru; Editing by Shreya Biswas)