Gold prices edged higher on Wednesday as bargain hunters stepped in after bullion dropped to a near one-week low in the previous session, while traders awaited U.S. private payroll data due this week for interest rate clues.

FUNDAMENTALS

* Spot gold rose 0.3% to $3,941.92 per ounce by 0115 GMT. Bullion fell more than 1.5% on Tuesday, hitting its lowest since October 30, as the dollar firmed.

* U.S. gold futures for December delivery lost 0.3% to $3,950.40 per ounce.

* The dollar held just under three-month highs touched in the previous session.

* The U.S. Federal Reserve cut interest rates last week and Chair Jerome Powell suggested it might be the last reduction in borrowing costs for the year.

* Market participants now see a 69% chance of a Fed rate cut in December, down from over 90% prior to Powell's remarks, as per CME's FedWatch Tool.

* On Monday, Fed officials continued pressing competing views on the economy, a debate set to intensify ahead of the Fed's December policy meeting and in the absence of key data, including from the Bureau of Labor Statistics, due to the federal government shutdown.

* Investors are awaiting the ADP U.S. employment data and ISM PMIs this week for clues on the interest rate trajectory.

* Non-yielding gold tends to do well in a low-interest-rate environment and during times of economic uncertainty.

* Bullion hit a record high of $4,381.21 on October 20, but has fallen close to 10% since then.

* Meanwhile, China ended a long-standing tax exemption policy for some gold retailers on Saturday, potentially setting back a gold buying spree in the world's biggest consumer market.

* Elsewhere, spot silver was steady at $47.10 per ounce, platinum lost 0.9% to $1,521.30 and palladium was down 0.5% at $1,384.51.

DATA/EVENTS (GMT) 0145 China RatingDog Services PMI Oct 0700 Germany Industrial Orders MM Sep 0700 Germany Manufacturing O/P Cur Price SA Sep 0700 Germany Consumer Goods SA Sep 0850 France HCOB Services, Composite PMI Oct 0855 Germany HCOB Services, Composite Final PMI Oct 0900 EU HCOB Services, Composite Final PMI Oct 0930 UK S&P GLOBAL PMI: COMPOSITE - OUTPUT Oct 0930 UK Reserve Assets Total Oct 1400 US ISM N-Mfg PMI Oct 1445 US S&P Global Comp, Svcs PMI Final Oct

(Reporting by Ishaan Arora; Editing by Subhranshu Sahu)