PRECIOUS-Gold gains as Fed rate cut bets build ahead of inflation data

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Major brokerages expect 25-basis-point Fed rate cut in December

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Silver, palladium headed for weekly gain

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PCE inflation data for September due at 10 a.m. ET

(Updates for AMERS morning session)

By Anmol Choubey

Dec 5 (Reuters) - Gold prices rose on Friday as expectations that the Federal Reserve will cut interest rates next week gained traction, with investors awaiting U.S. inflation data that could clarify the central bank's next move.

Spot gold rose 0.7% to $4,235.59 per ounce, as of 1416 GMT, and was on track for a 0.1% weekly gain.

U.S. gold futures for February delivery edged 0.6% higher to $4,266.50 per ounce.

"The odds are there for a rate cut... gold is retesting and reaffirming the $4,200/oz level. Although it has been volatile, the trajectory and momentum has been positive this week," said Alex Ebkarian, COO at Allegiance Gold.

Lower interest rates generally support gold, which is a non-yielding asset.

CME's FedWatch tool now shows an 87.2% chance that the U.S. central bank will cut rates next week.

Traders are waiting for September's Personal Consumption Expenditures (PCE) data later today after it was delayed due to the government shutdown. The release is expected to show a 0.2% monthly rise and 2.9% annual growth.

This follows Wednesday's labor market data, which showed private payrolls fell in November by the sharpest margin in over 2-1/2 years.

Several Fed policymakers have adopted a dovish tone recently.

Morgan Stanley projected a 25-basis-point rate cut by the Fed at its December 9-10 meeting, in line with estimates from J.P. Morgan, Bank of America, and a majority of Reuters-polled economists.

Meanwhile, physical gold demand in India and China eased this week as buyers wait for a correction in spot prices.

Silver rose 2.2% to $58.34 an ounce, up 3.5% for the week, after touching a record $58.98 on Wednesday.

The white metal has rallied 101% this year, fueled by supply deficits and its designation on the U.S. critical minerals list.

Platinum fell 0.4% to $1,640.23 and was set for a weekly loss, while palladium gained 1.2% to $1,465.29 and was poised to end the week higher. (Reporting by Anmol Choubey in Bengaluru; Editing by Leroy Leo)