Gold rises on bargain hunting and US rate cut, set for monthly gain

Gold prices edged higher on Friday, and were on track for a third straight monthly gain, as bargain hunting and a Federal Reserve interest rate cut lifted demand, while investors digested a tentative trade deal between China and the U.S.

FUNDAMENTALS

* Spot gold was up 0.3% at $4,034 per ounce, as of 0109 GMT. Bullion has gained 4.5% so far this month.

* U.S. gold futures for December delivery slipped 1.1% to $3,955 per ounce.

* On Wednesday, the U.S. central bank cut interest rates by a quarter of a percentage point for the second time this year, taking the benchmark overnight rate to a target range of 3.75%-4.00%.

* Non-yielding gold thrives in a low interest rate environment and during economic uncertainties.

* Traders have scaled back bets that the Fed will cut rates again at its next policy meeting on December 10 after remarks from Fed Chair Jerome Powell.

* Markets are now pricing in a 74.8% probability of a 25-basis-point cut from the Fed in December compared with a 91.1% chance a week ago, according to the CME Group's FedWatch tool.

* Keeping gold's gains in check, the dollar index held near its highest level in three months against its rivals, making bullion more expensive for other currency holders.

* U.S. President Donald Trump said on Thursday he had agreed with Chinese President Xi Jinping to trim tariffs on China in exchange for Beijing cracking down on the illicit fentanyl trade, resuming U.S. soybean purchases and keeping rare earths exports flowing.

* Global gold demand rose 3% year-on-year to 1,313 metric tons, the highest quarterly number on record, in the third quarter as investment demand soared, the World Gold Council said on Thursday.

* Meanwhile, SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.42% to 1,040.35 tons on Thursday from 1,036.05 tons on Wednesday.

* Elsewhere, spot silver was steady at $48.92 per ounce, platinum rose 0.2% to $1,613.50 and palladium climbed 2.1% to $1,474.5174.

DATA/EVENTS (GMT)

0130 China NBS Manufacturing PMI Oct

0700 UK Nationwide house price mm, yy Oct

0745 France CPI (EU Norm) Prelim MM, YY Oct

0745 France CPI Prelim MM, YY NSA Oct

0745 France Producer Prices YY Sep

1000 EU HICP Flash YY Oct

1000 EU HICP-X F,E,A,T Flash MM, YY Oct