PRECIOUS-Gold steady as traders assess further rate cuts, set for third monthly rise

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Gold set for third monthly gain

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Investors trim December rate cut bets from above 90% to 65%

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Trump reduces tariffs on China to 47% from 57%

(Recasts for early morning US trading)

By Noel John and Pablo Sinha

Oct 31 (Reuters) - Gold prices held steady above $4,000 an ounce on Friday as traders weighed uncertainty around another interest rate cut by the U.S. Federal Reserve this year, but the metal remained poised for a third straight monthly gain.

Spot gold was steady at $4,023.44 per ounce at 9:32 a.m. ET (1332 GMT), after falling to $3,988.37 earlier in the session. Prices were on track for a gain of 4% this month.

U.S. gold futures for December delivery were up 0.5% at $4,035.30 per ounce.

The dollar index held near a three-month high, making greenback-priced bullion more expensive for other currency holders.

"A lot of traders have been waiting on the sidelines to reallocate back into the gold market. I think they did that below the $4,000 mark," said Phillip Streible, chief market strategist at Blue Line Futures. The U.S. Federal Reserve lowered interest rates on Wednesday, but hawkish remarks from Chair Jerome Powell have caused traders to dial back bets on another cut in December.

Markets are now pricing a 65% chance of an interest rate cut in December, down from over 90% earlier in the week, the CME FedWatch tool showed.

Gold loses its appeal when interest rates are higher, as it is a non-yielding asset. The metal has gained 53% this year, hitting a record high of $4,381.21 on October 20.

Morgan Stanley on Friday said it continues to see upside for gold on interest rate cuts, ETF inflows, central bank purchases and ongoing economic uncertainty. The bank expects gold to average $4,300 in the first half of 2026. U.S. President Donald Trump said on Thursday he would trim tariffs on China to 47% from 57% in exchange for Beijing cracking down on illicit fentanyl trade, resuming U.S. soybean purchases and keeping rare earths exports flowing.

Elsewhere, spot silver rose 0.1% to $48.93 per ounce, platinum lost 1.7% to $1,583.80, while palladium gained 1.4% to $1,464.75. (Reporting by Noel John and Pablo Sinha in Bengaluru, editing by Deepa Babington)