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Gold up after closing lower in the last four sessions

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Traders see a 100% chance of rate cut in September

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US initial jobless claims data due on Thursday

(Rewrites as of 1343 GMT)

By Anushree Ashish Mukherjee

Aug 7 (Reuters) - Gold prices firmed on Wednesday on

mounting bets of U.S. interest rate cuts in September and rising

geopolitical tensions in the Middle East, with markets awaiting

U.S. economic data for clues on the Federal Reserve's interest

rate path.

Spot gold rose 0.5% to $2,400.89 per ounce, as of

9:43 a.m. ET (1343 GMT). U.S. gold futures gained 0.4%

to $2,441.10.

Bullion prices fell as much as 3% on Monday, caught in a

global sell-off driven by fears of a U.S. recession.

"I do think a correction is most likely if economic data

shows that the recession fears are justified ... gold will

probably hit a new all time high in the coming months," said

Everett Millman, chief market analyst with Gainesville Coins.

Last week's soft jobs report has led traders to expect

nearly 106 basis points of rate cuts by year-end, with a 100%

chance of a September rate cut, according to the CME FedWatch

Tool.

On Tuesday, the leader of Hezbollah pledged a "strong and

effective" response to the killing of its military commander by

Israel last week, no matter the consequences.

Bullion is considered a hedge against geopolitical and

economic uncertainties and tends to thrive in a low interest

rate environment.

"Jobless claims on Thursday is something markets will be

looking for confirmation of slowing economic numbers,

particularly employment," said Bart Melek, head of commodity

strategies at TD Securities.

Meanwhile, China's central bank held back on buying gold for

its reserves for a third straight month in July, official data

showed on Wednesday.

"There has been some improvement in the appetite for gold in

the West, but really China does lead the way in this regard and

if they're not buying as much, then that's going to have a

bigger impact on the aggregate global gold demand," Millman

added.

Spot silver edged 0.2% lower to $26.98 per ounce.

Platinum rose 1% to $921.23 and palladium was

up 2.6% to $897.00.