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Gold advances to three-month high on rising rate cut bets

Production of gold at Novosibirsk precious metals plant

By Anjana Anil

(Reuters) - Gold prices hit a three-month peak on Monday, driven by increased bets for a June interest rate cut by the U.S. Federal Reserve.

Spot gold was up 1.4% at $2,113.28 per ounce as of 02:10 p.m ET (1910 GMT), its highest since Dec. 4, when prices hit an all-time high of $2,135.40.

U.S. gold futures settled about 1.5% higher at $2,126.3.

Gold surged about $50 over the course of last week, driven by tepid U.S. manufacturing and construction spending, and weaker price pressures.

Gold could easily push above the record highs, said Phillip Streible, chief market strategist at Blue Line Futures in Chicago.

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"(Fed Chair Jerome) Powell speaks two times this week and he could come out and be a bit more dovish ... we could see a miss on the (U.S.) jobs data on Friday," all factors that will help gold, Streible added.

Markets are pricing in a 66% chance of a Fed rate cut in June, according to the CME Fed Watch Tool.

"If inflation numbers remain tame, gold's going to continue to trend higher," said Jim Wyckoff, senior analyst at Kitco Metals.

Gold suffers when high U.S. interest rates to tame inflation raise returns on competing assets such as bonds and boost the dollar, making the metal costlier to buy with foreign currencies.

"Heightened geopolitical tensions around the world have reduced the short-selling appetite, basically all strengthening gold's current buy-on-dips credentials," wrote Ole Hansen, Saxo Bank's head of commodity strategy.

London's gold price benchmark hit an all-time high of $2,098.05 per troy ounce at an afternoon auction on Monday, surpassing the previous record of $2,078.40 set on Dec. 28, the London Bullion Market Association said.

Platinum rose 1.1% to $897.10 per ounce and palladium gained 0.5% to $960.50. Spot silver climbed 2.8% at $23.79.

(Reporting by Anjana Anil in Bengaluru; Editing by Shailesh Kuber and Richard Chang)