By A. Ananthalakshmi
SINGAPORE (Reuters) - Gold retained losses from the previous two sessions on Friday as equities and the dollar firmed, while traders awaited U.S. nonfarm payrolls data to gauge the strength of the economy and its impact on the Federal Reserve's interest rate policy.
Spot gold was little changed at $1,185.11 an ounce by 0644 GMT, after losing 0.6 percent in the previous session. The metal is on track for a small 0.5 percent gain this week.
The nonfarm payrolls report is closely watched as it provides a good reading of the health of the economy. That could in turn provide clues as to when the U.S. central bank would begin to hike rates from record lows.
Strong data could prompt the Fed to raise rates soon, a move that would hurt demand for non-interest-paying bullion. Gold prices could take a further hit from a strong report.
"A nonfarm number below 200,000 may lift gold back up to $1,200, and along with it, probably the death knell for a June hike," said Howie Lee, an analyst at Phillip Futures.
A print in excess of 230,000 may send the precious metal to $1,170, Lee said.
Markets initially expected the Fed to raise rates at its June policy meeting, but the recent batch of mixed economic data has pushed those expectations to later this year.
Analysts polled by Reuters expect nonfarm payrolls to increase by 224,000 in April after the meagre 126,000 increase in the prior month.
The possibility of a strong jobs report was also reinforced by Thursday's data on weekly claims for unemployment benefits, which held near a 15-year low last week in a sign that the labour market was strengthening.
"In combination with a range of other labour market indicators (Thursday's) data suggest that the underlying conditions in the U.S. labour market remain robust," ANZ analysts said in a note, forecasting nonfarm payrolls to rise by 250,000 in April.
The dollar got a boost from the strong data, hurting gold's safe-haven appeal. Also denting the precious metal was the stability in bond and equity markets on Thursday, following a sharp sell-off.
Reflecting investor anxiety, holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, fell 0.36 percent to 739.07 tonnes on Thursday.
(Editing by Himani Sarkar and Subhranshu Sahu)
