PRECIOUS-Gold hits 2-week peak on Fed rate cut optimism with inflation data looming

* US CPI due on Wednesday, PPI on Thursday * China to adopt "appropriately loose" monetary policy in 2025 (Updates with mid-session trading) By Daksh Grover Dec 10 (Reuters) - Gold prices climbed to a two-week high on Tuesday, helped by rising tensions in the Middle East and expectations of a U.S. rate cut this month, with key U.S. inflation data later this week in focus. Spot gold XAU= climbed 0.7% to $2,678.21 per ounce, as of 1226 GMT. U.S. gold futures GCv1 rose 0.6% to $2,700.80. Friday’s U.S. jobs report has boosted bets around a December Fed rate cut, while geopolitical tensions in the Middle East and reports of China’s central bank resuming gold purchases after a six-month break are supporting gold prices, said FXTM senior research analyst Lukman Otunuga. Traders now see about an 86% probability of a 25-basis-point U.S. rate cut next week, according to the CME FedWatch tool, up significantly from 73% last week. Investors are eyeing the U.S. Consumer Price Index (CPI) release on Wednesday and the Producer Price Index (PPI) on Thursday, both expected to have an influence on the Fed's decision. "Gold bulls could face obstacles if a hotter-than-expected U.S. CPI report reduces bets around Fed cuts beyond December 2024," Otunuga added. Non-yielding bullion tends to shine in a lower-interest-rate environment and during periods of economic or geopolitical instability. Syrian sources reported on Tuesday that Israeli forces had advanced to 25 km southwest of Damascus, beyond a buffer zone in southern Syria, and conducting overnight airstrikes on Syrian military targets. Israel denied going beyond the buffer zone. Heraeus Precious Metals said gold could extend its record run into 2025 as further interest rate cuts from major central banks and the prospect of a weaker dollar would boost demand for the safe-haven asset. Elsewhere, Beijing's Politburo was quoted as saying China would adopt an "appropriately loose" monetary policy and a more proactive fiscal approach next year to spur economic growth. Spot silver XAG= rose 0.3% to $31.90 per ounce, platinum XPT= rose 0.2% to $940.85 and palladium XPD= was down 0.6% at $967.57. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Spot gold price in USD per oz https://reut.rs/4fcZHvs ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Daksh Grover and Rahul Paswan in Bengaluru, additional reporting by Swati Verma and Anushree Mukherjee; Editing by Tasim Zahid, Louise Heavens and Kevin Liffey) (([email protected];))