Gold flat as dollar holds firm; investors seek more US data

Oct 2 - Gold prices were flat on Wednesday, as the dollar held firm and market participants looked ahead to upcoming U.S. data for insights into possible interest rate cuts later this year.

FUNDAMENTALS

* Spot gold edged 0.2% lower to $2,658.07 per ounce, as of 0036 GMT. Bullion hit a record high level of $2,685.42 on Thursday.

* U.S. gold futures were down 0.4% to $2,679.10.

* The dollar held to its sharpest gain in a week. A stronger dollar makes greenback-priced bullion more expensive for other currency holders.

* Data on Tuesday showed that U.S. job openings unexpectedly rose in August after two months of decline. However, hiring remained weak, indicating a slowing labor market that may lead the Federal Reserve to cut interest rates again in November.

* Currently, traders see a 63% chance of a 25-basis-point cut in November and a 37% chance of a 25-bp cut, per CME FedWatch Tool.

* Lower interest rates reduce the opportunity cost of holding gold, which is also viewed as a safe asset during economic and political turmoil.

* On the geopolitical front, Iran said early on Wednesday that its missile attack on Israel was finished barring further provocation, while Israel and the U.S. promised to retaliate against Tehran's escalation as fears of a wider war intensified.

* Markets will be cautious ahead of ADP employment data and remarks from several Fed officials due later in the day, which might provide hints regarding Fed rate-cut cycle.

* SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings rose 0.33% to 874.82 tonnes on Tuesday.

* Meanwhile, physical demand for gold across key markets has tumbled as prices continue to rise, with some retail consumers opting to sell their holdings and book the profit, industry players and analysts said.

* Spot silver fell 0.3% to $31.31 per ounce, platinum gained 0.4% to $989.49 and palladium rose 0.61% to $1,000.75.

DATA/EVENTS 0900 EU Unemployment Rate

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