PRECIOUS-Gold rises on softer dollar; market awaits further Fed guidance

* Markets await PCE data due on Friday * Dollar down 0.3% against its rivals * Odds of 25 bp US rate cut in Sept at 63.5% -CME FedWatch (Rewrites paragraph 1, adds comments, details and updates prices) By Anushree Ashish Mukherjee Aug 27 (Reuters) - Gold prices rose on Tuesday driven by a weaker dollar, with investors awaiting inflation data that might provide insights on the scale of an expected interest rate cut by the Federal Reserve next month. Spot gold XAU= rose 0.3% to $2,524.94 per ounce, as of 2:57 p.m. ET (1857 GMT), shy of the record high of $2,531.60 hit last week. U.S. gold futures GCcv1 settled 0.1% lower to $2,552.90. The dollar index =USD fell 0.3%, making gold more attractive for other currency holders USD/ . "Biggest thing right now is the drop in the U.S. dollar that we've seen over the last hour has given gold a little bit of a push here, and you're seeing a lot of buying on this dip," said Bob Haberkorn, senior market strategist at RJO Futures. Investors now await the release of the Personal Consumption Expenditures (PCE) data, a key inflation report and the Fed's preferred inflation gauge, scheduled for Friday. A surprise of hotter-than-expected inflation data could slightly influence the Fed's policy, but its assured they will cut interest rates in September and possibly again this year, Jim Wyckoff, senior market analyst at Kitco Metals, said. Traders see a 63.5% chance of a 25-basis-point (bp) rate cut in September and about a 36.5% probability of a bigger 50-bp reduction, according to the CME FedWatch tool . Bullion remains above the $2,500 per-ounce psychological level and is heading for its best year since 2020, driven by investor optimism about upcoming U.S. rate cuts and lingering concerns about the Middle East conflict. "Much of the positive news for gold may therefore already have been priced in. We feel vindicated in our view that gold has no significant upside potential for the time being," Commerzbank wrote in a note. "We see more room for the three other precious metals that have not caught up with gold in recent weeks" Among other metals, spot silver XAG= rose 0.6% to $30.07 per ounce, while platinum XPT= fell 0.1% $960.90 and palladium XPD= gained 1.8% to $975.58. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Spot gold price in USD per oz https://reut.rs/3ACP8mS ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Anushree Mukherjee in Bengaluru; Editing by Krishna Chandra Eluri and Mohammed Safi Shamsi) (([email protected];))