Gold prices rose on Friday and were set for a fourth consecutive weekly gain, as mounting concerns over a weakening U.S. labour market eclipsed inflation worries ahead of a widely expected Federal Reserve rate cut next week.

Spot gold was up 0.6% at $3,654.37 per ounce, as of 0211 GMT. The contract hovered near a record high of $3,673.95 touched on Tuesday. Bullion has gained 1.9% so far this week.

U.S. gold futures for December delivery were up 0.5% at $3,692.80.

"Now the market is looking for a high chance of at least three interest rate cuts before 2025 ends, which is much more than earlier projections from two months ago," OANDA senior market analyst Kelvin Wong said, adding that this is helping gold at the moment.

U.S. consumer prices rose 0.4% in August, the steepest monthly rise in seven months, while data on Wednesday showed an unexpected decline in U.S. producer prices in August.

Weekly jobless claims surged last week, underscoring a material softening in labour market conditions. This followed the U.S. employment report last Friday, which signalled job growth nearly stalled in August.

The Fed is widely anticipated to lower its key interest rate by 25 basis points on Wednesday, with a slim possibility of a 50-basis-point reduction, according to CME Fedwatch tool, opens new tab.

Non-yielding bullion, often considered a hedge against inflation and economic uncertainties, tends to perform well in a low-interest-rate environment.

"It's not far off from $3,700 ... so that could happen at any moment. In the short term, we see some resistance at about $3,900 according to our technical analysis, but long term, we feel that it is probably still heavily underowned by most institutions," said Ryan McIntyre, managing partner at Sprott Inc.

The yellow metal has risen about 39% so far this year, driven by a soft dollar, strong central bank buying, dovish monetary policy and heightened global uncertainty.

Elsewhere, spot silver rose 1.2% to $42.04 per ounce, platinum was up 0.7% at $1,388.85 and palladium gained 0.8% to $1,197.52. All three metals were set for a weekly rise.

Source: Reuters