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Gold hits record high at $3,666.38/oz

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U.S. dollar at near seven-week low

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Traders widely see 25-bp rate cut in September

(Rewrites for U.S. morning hours)

By Anushree Mukherjee and Sarah Qureshi

Sept 9 (Reuters) - Gold continued its record rally on

Tuesday, as expectations of an imminent September U.S. interest

rate cut weighed on the dollar and Treasury yields, while

investors looked ahead to inflation data due this week.

Spot gold was up 0.7% at $3,661.09 per ounce, as of

0933 a.m. ET (13:33 GMT), after hitting a record high of

$3,666.38 earlier in the session.

U.S. gold futures for December delivery rose 0.7% to

$3,701.40.

The dollar index fell to a near seven-week low

against rivals, making gold more attractive to other currency

holders, while benchmark U.S. 10-year Treasury yields

held five-month lows.

"This rally is largely driven by expectations that the

Federal Reserve will begin cutting rates, potentially as early

as September," said Bart Melek, head of commodity strategies at

TD Securities.

Traders are currently widely pricing in a 25-basis-point

rate cut next week, with some also betting on a larger

50-basis-point move.

This comes after Friday's data showed U.S. job growth

weakened sharply in August. Lower interest rates pressure the

dollar and bond yields, raising the appeal of non-yielding

bullion.

Investors now await U.S. producer price data on Wednesday

and consumer price data on Thursday for further rate cut cues

ahead of the Fed's meeting next week.

"If the US economy does a little weaker, that essentially

means that we could see more flows into non-standard asset

classes like gold to hedge against that potential decline,"

Melek adds.

Bullion, which surpassed $3,600/oz on Monday, has notched

multiple record highs this year, driven by a soft dollar, strong

central bank buying, dovish monetary policy and heightened

global uncertainty.

"We're very bullish even at $3,600 - we think the markets

will continue to rally because we don't see a shift that's going

to happen with respect to tariff policy, trade relations (or)

geopolitics," said John Ciampaglia, CEO of Sprott Asset

Management.

"If any of those things were to improve... I think you would

get a pause in the price appreciation of gold."

Elsewhere, spot silver edged 0.3% lower to $41.19 per

ounce. Platinum gained 0.2% to $1,385.25, while palladium

slipped 0.1% to $1,133.03.