PRECIOUS-Gold rally pauses as focus shifts to US economic data

* Real rates outlook to drive gold longer term- ANZ analyst * US nonfarm payrolls data due on Friday (Updates as of 1146 GMT) By Ashitha Shivaprasad Oct 2 (Reuters) - Gold eased on Wednesday, taking a breather after rallying in the last session on an escalation in the Middle East conflict, while traders waited for more clues on U.S. interest rates. Spot gold XAU= was down 0.5% at $2,650.89 per ounce by 1146 GMT, following a jump of more than 1% on Tuesday after Iran launched missile strikes on Israel. U.S. gold futures GCcv1 eased 0.7% to $2,672.00. Reining in gold's run was strength in the rival safe-haven dollar. USD/ "Gold is just seeing some short-term pressure due to a stronger dollar but the environment remains extremely favourable for gold," said Kinesis Money market analyst Carlo Alberto De Casa. Gold was still within sight of recent highs on fears of further escalation in the Middle East, including retaliation by Israel. Longer term, the outlook for real interest rates is going to drive gold, Daniel Hynes, senior ANZ commodities strategist said in a note. Bullion's 28% rally so far this year has been driven in part by the Fed's monetary easing, which enhances the relative appeal for zero-yield gold. Traders see a 38% chance of a 50 bps cut from the Fed in November. FEDWATCH They will keep a close eye on data, including U.S. ADP employment figures later in the day and Friday's nonfarm payrolls, while also scanning commentary from Fed officials on Wednesday. "If the data comes in weak and raises chances of a 50 basis point cut in November, gold could see record prices again," De Casa added. Silver XAG= rose 0.1% to $31.44. "Supported by a stabilising industrial metal sector, silver could potentially do even better (than gold), not least considering its relative cheapness to gold, which could see it take aim at $40 next year," Saxo Bank said in a note. Platinum XPT= gained 0.8% to $993.87 and palladium XPD= added 1.2% to $1,006.51. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Spot gold price in USD per oz https://reut.rs/3TQ09aU ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Ashitha Shivaprasad in Bengaluru. Editing by Jane Merriman and Vijay Kishore) (([email protected];))