PRECIOUS-Gold rises as dollar softens, traders brace for Fed rate cut

*

Dollar languishes near over one-month lows

*

Core PCE data on Friday showed modest increase in prices

*

Silver hit a record high of $59.32/oz on Friday

(Updates with comment for Asia morning session trade)

By Ishaan Arora

Dec 8 (Reuters) - Gold nudged higher on Monday, supported by a softer dollar as traders grew more confident the U.S. Federal Reserve will deliver an interest-rate cut at its policy meeting this week.

Spot gold was up 0.3% at $4,212.70 per ounce, as of 0319 GMT. U.S. gold futures for December delivery were steady at $4,241.30 per ounce.

The U.S. dollar edged lower to hover near one-month lows touched on December 4, making greenback-priced gold cheaper for overseas buyers.

"Core PCE data came and went without incident, which leaves the Fed on track to cut rates this week, with this expectation of looser monetary conditions driving gold to the upside," KCM Trade Chief Market Analyst Tim Waterer said.

"The anticipated rate cut this week is keeping the dollar in check while simultaneously giving the gold price some room to move northwards," he added.

U.S. consumer spending increased moderately in September after three consecutive monthly gains, suggesting a loss of momentum in the economy at the end of the third quarter as a lacklustre labour market and rising cost of living curbed demand.

This followed private payroll data showing the sharpest decline in more than two-and-a-half years last month.

Dovish commentary from several Fed officials has further fuelled expectations of monetary easing.

CME's FedWatch tool shows markets pricing in roughly an 88% chance of a 25-basis-point rate cut at the Fed's December 9-10 meeting.

Lower interest rates tend to favour non-yielding assets such as gold.

Silver slipped 0.4% to $58.06 per ounce, after hitting a fresh record high of $59.32 on Friday. The white metal is up more than 100% so far this year.

Silver is widely seen as still undervalued relative to gold, and its 2025 rally reflects both growing industrial appetite and expectations that demand will continue to outpace supply through 2026, Waterer said.

Elsewhere, platinum gained 0.7% to $1,653.0, while palladium slid 0.1% to $1,455.97.

(Reporting by Ishaan Arora in Bengaluru, Editing by Subhranshu Sahu and Sherry Jacob-Phillips)