PRECIOUS-Gold edges down on profit taking, US data reinforces Fed rate cut bets

*

US Retail Sales data falls below expectations in September

*

Fed's Stephen Miran calls for further rate cuts

*

Traders see 85% chance of US interest rate cut next month

(Updates for US midsession trading)

By Pablo Sinha

Nov 25 (Reuters) -

Gold prices edged down on Tuesday as some traders booked profits after prices hit an over one-week high earlier in the session on increased rate cut expectations.

Spot gold fell 0.3% to $4,128.85 per ounce by 10:42 a.m. ET (1542 GMT). Prices earlier in the day hit their highest level since November 14, and rose nearly 2% on Monday after some U.S. Federal Reserve policymakers signalled support for a third interest rate cut this year.

U.S. gold futures for December delivery rose 0.8% to $4,125 per ounce.

"Some profit-taking by the shorter-term futures traders might have dropped gold off its highs," said Jim Wyckoff, senior analyst at Kitco Metals.

Meanwhile, newly released U.S. economic data reinforced Fed rate cut bets.

Retail sales increased less than expected in September, taking a breather following a recent stretch of strong gains, while data showed that for the 12 months through September, the U.S. producer price index increased 2.7% after advancing by the same margin in August. The report was delayed by the 43-day shutdown of the government.

"There's revived hope for a December rate cut based on recent dovish Fed speak, and this (data) doesn't seem to be changing that," said Peter Grant, vice president and senior metals strategist at Zaner Metals.

Markets are pricing in an 85% chance of a December rate cut - compared to 30% last week - and a 64% probability of a cut in January, CME data showed.

Fed Governor Stephen Miran said on Tuesday that a deteriorating job market calls for further rate cuts, echoing dovish remarks from Fed Governor Christopher Waller on Monday.

Non-yielding gold tends to do well in low-interest-rate environments, and during geopolitical and economic instability.

"The underlying conditions of ongoing economic uncertainty, geopolitical turbulence and dovish Fed expectations continue to support gold prices (in the near term)," ActivTrades analyst Ricardo Evangelista said.

Spot silver fell 0.8% to $50.99 per ounce, platinum fell 0.2% to $1,541.01 and palladium lost 0.5% to $1,388.67. (Reporting by Pablo Sinha in Bengaluru; additional reporting by Sherin Elizabeth Varghese, Editing by Louise Heavens and Vijay Kishore)