Gold near 3 1/2 month high on bets Fed to delay rate hike

* Earlier in the day, China data showed consumer inflation cooled more than expected in September while producer prices extended their slide to a 43rd straight month, adding to concerns about deflationary pressures in the world's second-largest economy.

* Investors believe the weakening backdrop in the US and elsewhere may cause Fed policymakers to delay the first rate increase in nearly a decade, earlier expected late in 2015.

* Gold is a non-yielding asset and tends to benefit from ultra-low rates.

* It also benefited as the dollar on Wednesday slumped to its lowest since late August against a basket of major currencies. A weaker dollar makes gold cheaper for holders of other currencies.

* Elsewhere, Elliott Management Chief Executive Paul Singer said on Wednesday every institutional portfolio should be 5-10 percent invested in gold to protect against zero interest rates that are degrading the value of paper currency.

* Among other precious metals, silver hit a 3-1/2-month high of USD 16.18 an ounce on Thursday before easing slightly. Platinum climbed to a five-week high of USD 999, before giving up gains to trade down 0.2 percent. Palladium edged up.MARKET NEWS

* Global equity markets slid for a second day on Wednesday on expectations the Fed will not raise interest rates until next year.