PRECIOUS-Gold climbs 2% to two-week peak as soft economic data cements rate cut bets

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Gold hits highest level since October 27

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Silver rises over 3% to hit highest since October 21

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US Senate advances bill to end federal shutdown

(Rewrites for AMERS morning session)

By Noel John and Pablo Sinha

Nov 10 (Reuters) - Gold prices climbed over 2% on Monday to hit a two-week high, as soft economic data out of the U.S. reinforced expectations that the Federal Reserve will cut interest rates, lifting demand for the non-yielding asset.

Spot gold climbed 2% to $4,079.71 per ounce as of 9:45 a.m. ET (1445 GMT), after hitting its highest level since October 27 earlier in the session. U.S. gold futures for December delivery rose 2% to $4,090.80 per ounce.

The dollar index eased, making gold more affordable for overseas buyers.

"Some weak data last week has the market tilting a little more dovish in their Fed expectations... we could very much still see a December rate cut," said Peter Grant, vice president and senior metals strategist at Zaner Metals.

Data last week showed the U.S. economy shed jobs in October, with losses in the government and retail sectors. Additionally, U.S. consumer sentiment slumped in early November as households worried about the economic fallout, data on Friday showed.

Markets now see a 67% chance of a rate cut in December, with odds climbing to about 80% by January, according to CME Group's FedWatch tool.

Non-yielding gold tends to do well in a low-interest rate environment and during times of economic uncertainty.

Gold could range between $4,200 to $4,300/oz by the end of the year, with $5,000/oz still a reasonable objective for the first quarter of next year, Grant added.

Meanwhile, the U.S. Senate on Sunday moved forward on a measure aimed at reopening the federal government and ending a now 40-day shutdown.

"A reopening would restore data flow and revive expectations for a December rate cut, but more importantly it shifts market focus back to the deteriorating U.S. fiscal outlook," said Ole Hansen, head of commodity strategy at Saxo Bank, in a note.

Elsewhere, spot silver rose 3.2% to $49.84 per ounce, reaching its highest since October 21, platinum rose 1.4% to $1,566.08 and palladium added 1.1% to $1,396.50. (Reporting by Noel John and Pablo Sinha in Bengaluru)