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US consumer prices increase more than expected in August

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US weekly jobless claims increase as labor market softens

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Bullion hit a record high of $3,673.95 on Tuesday

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Fed set to announce its next policy decision on Sept. 17

(Updates for U.S. morning hours)

By Sherin Elizabeth Varghese

Sept 11 (Reuters) - Gold prices pared losses on

Thursday, holding at near-record highs as soft U.S. jobs data

outweighed concerns from firmer inflation data, with investors

still betting on the Federal Reserve easing interest rates next

week.

Spot gold was down 0.2% at $3,632.99 per ounce, as of

9:03 a.m. EDT (1303 GMT). Bullion had hit a record high of

$3,673.95 on Tuesday. U.S. gold futures for December

delivery fell 0.3% to $3,671.50.

"Gold is being 'saved' by the sharp jump in weekly initial

jobless claims, which hit a three-year high at 263,000 while

core CPI remains elevated at 0.3% month-on-month," said Tai

Wong, an independent metals trader.

Recent price movements point to some buyer fatigue, but

gold's outlook over the next few months remains constructive,

limiting the scope for a significant pullback, Wong added.

U.S. consumer prices rose more than expected in August,

recording the largest annual increase in seven months, while

weekly jobless claims also jumped sharply, highlighting

softening labor market conditions.

Data on Thursday showed U.S. producer prices unexpectedly

declined in August, reflecting weaker trade services margins and

muted goods costs.

Coupled with last week's soft nonfarm payrolls, along with

revisions that revealed 911,000 fewer jobs in the 12 months

through March, the figures pointed to cooling underlying

momentum in the economy and added weight to expectations for Fed

easing.

Markets are fully pricing in a 25-basis-point cut at the

Fed's policy meeting next Wednesday, with a slim chance of a

half-point cut, CME FedWatch data showed. The central bank

paused its easing cycle in January as it weighed the

inflationary impact of tariffs.

The yellow metal has climbed 38% so far this year and is

often seen as thriving in lower-rate settings, valued by

investors as a hedge against inflation and broader uncertainty.

Slowing growth, elevated inflation, geopolitical shifts and

diversification away from U.S. assets and the dollar will

continue to underpin investment demand and central bank buying,

supporting gold, ANZ said in a note.

Elsewhere, spot silver was down 0.1% at $41.09 per

ounce. Platinum fell 0.3% to $1,390.30 and palladium

gained 0.8% to $1,182.50.