Gold prices were nearly unchanged on Thursday as markets anticipated U.S. jobs data due at the end of the week for guidance on monetary policy for the remainder of the year.
The U.S. Fed held interest rates unchanged on Wednesday but raised its inflation outlook and flagged "further gradual" rate increases.
"One thing that could throw a wrench into the Fed’s plans to raise three times this year is wages. Employment has certainly continued to march higher with unemployment dropping, but wages have been sticky," said Chris Gaffney, president of world markets at St. Louis-based EverBank.
Stronger-than-expected jobs data, lower unemployment and higher wages would signal strength in the economy, and could in turn strengthen the dollar and pressure gold, Gaffney added.
Gold gained just 3.2 percent in January as the dollar fell to three-year lows against a basket of major currencies. It hit a 17-month peak of $1,366.07 on Jan. 25. <.dxy>
"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.
The dollar index inched lower after the Fed signalled its confidence about inflation and growth in the U.S. economy, reinforcing views it will raise rates several times this year. [USD/]
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.
Holdings of the world`s largest gold-backed exchange-traded fund, New York-listed SPDR Gold Shares
In other precious metals, silver
"I wouldn`t be surprised to see prices reach $1,000 because demand is strong but its not strong enough for the price to be at $1,100," said Natixis analyst Bernard Dahdah, adding that this was the beginning of a correction for the metal.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)