(Rewrites for U.S. early-morning hours)

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Gold hit two-week peak on Friday

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Markets expect 83% chance of a Sept rate cut, as per CME

FedWatch

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Silver could climb $40 and beyond, says analyst

By Sarah Qureshi

Aug 25 (Reuters) - Gold prices eased on Monday, as

investors locked in profits and a firmer dollar added pressure,

while the market's focus shifted to upcoming U.S. PCE data for

cues on the Fed's policy path.

Spot gold inched down 0.1% at $3,370.14 per ounce, as

of 0957 a.m. ET (13:57 GMT), after hitting its highest level

since August 11 on Friday. U.S. gold futures for

December delivery also fell 0.1% to $3,414.90.

The dollar nudged 0.2% higher against rival fiat currencies,

making bullion priced in the currency more expensive for foreign

buyers.

"The market is absorbing Powell's comments from Friday and

perhaps taking a little bit of profit, as we await fresh inputs

that might give a better indication of the likelihood of a

September rate cut," said Peter Grant, vice president and senior

metals strategist at Zaner Metals.

Gold prices climbed to a near two-week high on Friday, after

Federal Reserve Chair Jerome Powell signaled a possible interest

rate cut at the U.S. central bank's meeting next month. Powell

said that risks to the job market were rising, but that

inflation remained a threat and a decision had yet to be taken.

Markets anticipate a more than 83% chance of a 25-basis point

rate cut at the Fed's September policy meeting, according to the

CME FedWatch Tool.

Benchmark 10-year U.S. Treasury yields rose

after a sharp decline following Powell's speech on Friday. US/

Non-yielding gold thrives in a low-interest-rate

environment.

For further clues on the central bank's future rate cut

path, investors await the U.S. Personal Consumption Expenditures

data, due on Friday.

Elsewhere, spot silver was down 0.2% at $38.74 per

ounce, following a nearly one-month peak on Friday.

"I think $40 is certainly in play and beyond. The

fundamentals look very positive for silver and the market

remains in a supply deficit and is likely to remain in a supply

deficit for some time," Grant said.

Platinum edged 1.1% lower to $1,346.90 and palladium

dropped 2.1% to $1,102.79.