PRECIOUS-Gold lingers near one-week low ahead of US CPI data

Sept 11 (Reuters) - Gold prices lingered near a one-week low on Friday as expectations of a U.S. rate hike strengthened, with attention turning to U.S. consumer price index data due later in the day.

FUNDAMENTALS

* Spot gold XAU= held nearly steady at $4,318.88 per ounce, as of 0020 GMT, after hitting its lowest level since September 2 earlier. Prices fell nearly 2% on Thursday after U.S. producer prices increased as expected in August.

* U.S. gold futures GCcv1 for December delivery were down 1.1% at $4,359.50.

* The Federal Reserve is a bit more likely to raise short-term borrowing costs at its meeting next week, traders bet on Thursday, after the first of this week's key inflation reports.

* The Producer Price Index for final demand rose 0.4% last month after an upwardly revised 0.1% gain in July, the Labor Department's Bureau of Labor Statistics said.

* The U.S. consumer price index data is due at 1230 GMT.

* Meanwhile, the European Central Bank raised rates for the second time this year to quell an energy-driven inflation rise and warned that price pressures could prove lasting, fuelling bets on more policy tightening as soon as October.

*Despite gold being known as an inflation hedge, rising interest rates often pressure the metal, which offers no yield.

* Iran-aligned Houthis seized control of Yemen's port city of Mocha on Thursday and advanced down the Red Sea coast to strategic islands, military sources said, hours after President Donald Trump said he expected the Iran war to end after the U.S. midterm elections.

* Among other metals, spot silver XAG= fell 0.1% at $63.48, platinum XPT= steadied at $1,777.42 and palladium XPD= lost 0.2% to $1,279.25.

(Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Rashmi Aich)

((Ashitha.Shivaprasad@thomsonreuters.com;))