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US private jobs data due at 0815 ET

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European shares hit two-week low

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Silver, Palladium up more than 1% each

(Recasts, adds comments and updates for European morning

session)

By Brijesh Patel

Nov 5 (Reuters) - Gold prices gained more than 1% on

Wednesday, with a slight U.S. dollar pullback and wider risk-off

sentiment driving demand.

Spot gold was up 1.3% at $3,981.27 per ounce by 0845

GMT. U.S. gold futures for December delivery rose 0.8%

to $3,991.90 per ounce.

"The recent shift to more of a risk-off mood in financial

markets due to growing concerns about equity market valuations

is helping gold stabilise following its retreat from record

levels," said Julius Baer analyst Carsten Menke.

European shares hit a two-week low as equity valuations

continued to make investors nervous globally.

The dollar index, meanwhile, eased 0.1% after hitting

a more than three-month high, making gold less expensive for

other currency holders.

As the U.S. government shutdown nears the record for the

longest ever, investors are focusing on non-official economic

reports, including the ADP National Employment Report due later

on Wednesday for cues on the U.S. interest rate path.

The U.S. Federal Reserve cut interest rates last week and

Chair Jerome Powell signalled it might be the last reduction in

borrowing costs for the year.

Market participants now see a 72% chance of a rate cut in

December, down from over 90% before Powell's remarks, CME's

FedWatch Tool showed.

Non-yielding gold tends to do well in a low-interest-rate

environment and during times of economic uncertainty.

"We still see sound demand from safe-haven seekers for

physical gold, as is the case from emerging market central

banks," Julius Baer's Menke said.

Gold prices have gained about 52% this year, reaching an

all-time peak of $4,381.21 on October 20, bolstered by

geopolitical and economic uncertainties, rate-cut bets and

sustained central bank buying.

Elsewhere, spot silver gained 1.6% to $47.87 per

ounce, platinum gained 0.7% to $1,546.21 and palladium

climbed 1.3% to $1,408.99.