By Arpan Varghese
(Reuters) - Gold prices inched down to the lowest level in five weeks on Thursday, pressured by an uptick in the dollar ahead of U.S. non-farm payrolls data on Friday.
Spot gold was down by 0.1 percent at $1,206.46 per ounce, as of 0711 GMT. Earlier in the session, it hit $1,203.25, the lowest since Feb. 1.
U.S. gold futures eased 0.3 percent to $1,206.4.
Investors are awaiting February non-farm payrolls data on Friday as a barometer of the U.S. economy after Federal Reserve Chair Janet Yellen said last week the central bank was poised to lift rates provided jobs and inflation data held up.
Her comments were seen as cementing plans for an increase at the Fed's March 14-15 meeting. [FED/DIARY]
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"If the (nonfarm payroll) data does come in better than market expectations, it will drag gold prices further," said OCBC analyst Barnabas Gan.
"But with fund futures fully pricing in the rate hike story, I'd presume gold will just be supported at the $1,200 handle into next week, whereby the actual rate hikes will come in."
Interest rates futures implied traders saw an 86 percent chance of a rate hike next week on Wednesday, compared with 82 percent at Tuesday's close, according to CME Group's FedWatch program.
Higher rates tend to put pressure on gold prices because they raise the opportunity cost of holding non-yielding bullion while boosting the dollar, in which it is priced.
The dollar index, which pits the greenback against six major currencies, rose 0.1 percent to 102.15.
Meanwhile, the ADP National Employment Report released on Wednesday showed its biggest increase in more than a year in February, suggesting the U.S. economy remains on solid ground.
Spot gold may bounce into a range of $1,213-$1,219 per ounce before falling again, as it seems to have lost its bearish momentum around a support at $1,206, according to Reuters technical analyst Wang Tao.
Meanwhile, holdings of the largest gold-backed exchange-traded-fund (ETF), New York's SPDR Gold Trust GLD, remained unchanged on Tuesday from Monday. [GOL/ETF]
In other precious metals, silver slid as much as 0.4 percent to $17.17 per ounce. Earlier in the session, the metal hit $17.10, the lowest since Jan. 31.
Platinum was mostly unchanged at $945 per ounce, while palladium slipped 0.8 percent to $763.03 per ounce.
(Reporting by Arpan Varghese in Bengaluru; Editing by Richard Pullin and Sherry Jacob-Phillips)