By A. Ananthalakshmi
SINGAPORE (Reuters) - Gold languished near a three-month low on Thursday as investors positioned themselves for a U.S. rate hike this year, although they still awaited more cues from Federal Reserve officials speaking later in the day.
A strong U.S. nonfarm payrolls report last week bolstered expectations that the Fed would hike rates for the first time in nearly a decade at its next policy meet in December.
Higher rates would dent demand for non-interest-paying gold while boosting the dollar.
Spot gold edged up 0.2 percent to $1,087.80 an ounce by 0644 GMT as the dollar eased slightly from a seven-month high. The metal had dropped to $1,083.65 in the previous session, the lowest since Aug. 7.
"The $1,084-85 area is now building as a strong short-term support level with decent stop orders developing below," said MKS Group trader James Gardiner.
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"The dollar has managed to consolidate in the last few sessions, however, there is still an upward bias for the dollar which will continue to put pressure on the (precious) complex," he said.
Gold had slid for ten out of 11 sessions as of Wednesday.
The next major support level for gold is at a 5-1/2-year low of $1,077 reached in July, analysts have said.
Traders will be eyeing remarks by at least six Fed officials at various events later in the day for signals on economic growth and the U.S. central bank's monetary policy.
Fed Chair Janet Yellen and Vice Chair Stanley Fischer will also be speaking.
Focus will also be on economic data. New U.S. applications for unemployment benefits likely fell last week, according to a Reuters survey, almost reversing the prior week's increase, suggesting the labour market recovery continued to gain momentum in early November.
Investor flows have not been encouraging for gold. Assets in SPDR Gold Trust, the top gold-backed exchange-traded fund, fell to 663.43 tonnes on Tuesday - the lowest since September 2008 when Lehman Brothers filed for bankruptcy and kicked off a global financial crisis.
Other precious metals have also taken a hit from a stronger dollar. Silver was trading near a 2-1/2-month low of $14.22 reached in the previous session.
Platinum fell to $974 on Thursday, its lowest in nearly seven years. Palladium was trading near its lowest in two months. Both the metals have been hit by fund outflows.
(Reporting by A. Ananthalakshmi; Editing by Tom Hogue and Subhranshu Sahu)