Gold slips on firm dollar ahead of US jobs data

Gold edged lower on Friday, heading for its second consecutive week of losses as the dollar strengthened ahead of US jobs data expected to provide clues on the timing of a possible interest rate hike.

Spot gold was down 0.27 per cent at $1,313.60 an ounce by 0850 GMT, having hit its lowest since June 24 at $1,301.91 on Thursday after jobless claims data beat expectations.

US gold futures slipped by 0.26 per cent to $1,3110.11 an ounce, with prices held in a narrow range by uncertainty ahead of the payrolls data at 1230 GMT.

"People don't have a strong opinion and the market is not hugely positioned one way or the other," said Afshan Nabavi, head of trading at MKS SA.

"Overall it feels like it's going to be like that until we get some kind of confirmation about the direction of interest rates," added Nabavi.

Moves across financial markets were muted ahead of the US jobs data. Employers are expected to have added 180,000 jobs in August, going by the median estimate of 91 economists polled by Reuters.

An upbeat payrolls report would reinforce the view that a US rate rise is on the cards, with Fed officials having sounded a hawkish note at a meeting last weekend, pressuring gold further.

Gold is highly sensitive to rising US interest rates, which increase the opportunity cost of holding non-yielding bullion while boosting the dollar in which it is priced.

"A good jobs number could generate enough concern over a near-term rate rise to bolster the dollar and undercut gold," HSBC said in a note.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell for a third straight session. Holdings dropped 0.57 per cent to 937.89 tonnes on Thursday.

Asian physical gold demand improved slightly this week as a correction in prices prompted consumers to buy for the upcoming festival and wedding season, with discounts in India narrowing to their smallest in three months.

Silver was almost unchanged at $18.82 an ounce.

Platinum bucked the trend, rising 0.23 per cent to $1,040.80 after touching its lowest since July 1 at $1,035.15. Platinum was heading for its fourth straight weekly loss.

Palladium rose 0.5 per cent to $667, having dropped earlier to a six-week low of $654.72.