Gold price dips ahead of US nonfarm payroll data

London (Feb 1)  Gold prices fell on Thursday after the Federal Reserve left interest rates unchanged but hinted at hikes later this year, and as investors awaited the U.S. nonfarm payroll data for cues on the health of the world's largest economy.

Spot gold was down 0.4 percent at $1,339.71 per ounce, as of 0831 GMT. It touched $1,332.30 an ounce in the previous session, its lowest since Jan. 23.  U.S. gold futures for February delivery were nearly flat at $1,339.00 per ounce.

The Fed said inflation is likely to quicken this year, bolstering expectations borrowing costs will continue to climb under incoming central bank chief Jerome Powell. "We remain somewhat friendly to gold in the short-term; the dollar seems to be adrift, as investors are unsure what direction to push it," said INTL FCStone analyst Edward Meir. "We are detecting some sluggishness in the U.S. equity
markets and so this asset class might not prove to be as formidable a competitor to gold going forward," Meir added.

The dollar held steady against a basket of major currencies on Thursday after the Fed signalled its confidence about inflation and growth in the United States' economy, reinforcing views it will raise rates several more times this year.      

Inflation worries generally boost gold, which is seen as a safe-haven against rising prices. But expectations that the Fed will raise interest rates to fight inflation make gold less attractive because it does not pay interest.
    A stronger dollar makes bullion more expensive for holders
of other currencies, while higher interest rates lead to higher
bond yields and dampen demand for non-yielding gold.
   Traders now await the jobs report on Friday that will include
data on nonfarm payrolls to see if they offer more than a brief
respite to the ailing dollar.
    "We see the U.S. dollar to be soft in the first half of the
year until there is some information on how the U.S. tax reforms
have really worked. Even though gold's recent rally has been too
quick, we expect the strength in prices to continue and even go
past previous year's highs," Ji Ming, chief analyst at Shandong
Gold Group.
    Spot gold is biased to break a resistance at $1,347 per
ounce and rise towards the next one at $1,357, as it has
stabilized around a support at $1,335, according to Reuters
technical analyst, Wang Tao.        
    In other precious metals, silver slipped 0.4 percent
to $17.25 per ounce. Platinum declined 0.9 percent to
$991.00 per ounce.
    Palladium edged 0.8 percent lower to $1,019.50 per
ounce after falling to $1,013.72 earlier in the session, its
lowest since Dec. 18.

Reuters