Gold prices set for weekly gain on Fed rate-cut bets

Dec 15 (Reuters) - Gold prices inched down on Friday but stayed on track for a weekly gain, as prospects of the U.S. Federal Reserve lowering borrowing costs dented the dollar and Treasury yields, boosting demand for the safe-haven asset.

FUNDAMENTALS

* Spot gold was down 0.1% at $2,033.29 per ounce, as of 0113 GMT. However, bullion has risen 1.5% so far this week. U.S. gold futures edged 0.1% higher to $2,047.60.

* The Fed left interest rates unchanged on Wednesday and Chair Jerome Powell said the historic tightening of monetary policy is likely over, with a discussion of cuts in borrowing costs coming "into view".

* Fed officials estimated 75 basis points (bps) of rate cuts in 2024, with 2.4% inflation at the end of next year. Markets are now pricing in around a 75% chance of a rate cut in March, according to CME FedWatch tool.

* Lower U.S. interest rates put pressure on the dollar and bond yields, and increase the appeal of non-yielding bullion.

* The dollar was heading for a weekly drop after hitting a four-month low on Thursday, making gold less expensive for other currency holders.

* Benchmark U.S. 10-year bond yield, meanwhile, hovered near its lowest level since July.

* The European Central Bank pushed back against bets on imminent cuts to interest rates on Thursday by reaffirming that borrowing costs would remain at record highs despite lower inflation expectations.

* Data showed U.S. retail sales unexpectedly rose in November. A separate report showed initial claims for state unemployment benefits dropped 19,000 to a seasonally adjusted 202,000 for the week ended Dec. 9.

* Spot silver eased 0.3% to $24.07 per ounce, while platinum fell 0.2% to $956.21 and palladium slipped 0.4% to $1,098.13.

DATA/EVENTS (GMT) 0200 China Urban Investment (YTD) YY Nov 0200 China Retail Sales YY Nov 0200 China Unemp Rate Urban Area Nov 0745 France CPI (EU Norm) Final MM, YY Nov 0815 France HCOB Mfg, Serv, Comp Flash PMIs Dec 0830 Germany HCOB Mfg, Serv, Comp Flash PMIs Dec 0900 EU HCOB Mfg, Serv, Comp Flash PMIs Dec 0930 UK Flash Comp, Mfg, Serv PMIs Dec 1000 EU Total Trade Balance SA Oct 1100 EU Reserve Assets Total Nov 1415 US Industrial Production MM Nov 1445 US S&P Global Mfg, Comp, Serv Flash PMIs Dec (Reporting by Brijesh Patel in Bengaluru; Editing by Rashmi Aich)