Gold dips on profit taking, firm dollar ahead of US data

LONDON: Gold edged lower on Thursday, pressured by a slightly firmer dollar and as some investors sold to redeem profits after bullion's recent challenge to the upside.

Spot gold fell 0.24 percent to $1,251.81 per ounce by 1140 GMT, retreating from an overnight peak of $1,258.96.

US gold futures were up 0.4 percent at $1,253.50, after climbing as much as 1 percent to $1,260.80 earlier in the day.

"The slight uptick in the dollar and some profit taking after the move late yesterday is probably bringing in that bit of weakness," said Jonathan Butler, commodities analyst at Mitsubishi in London.

The markets were waiting for US non-farm payrolls data on Friday, which will likely be in line with expectations, he added. "So we may stay around this $1,250 to $1,260 level for some time, just as we have done since the end of March."

Investors were cautious ahead of the meeting between US President Donald Trump and Chinese President Xi Jinping due later on Thursday, the first between the world's two most powerful leaders.

Topping the agenda at Trump's Mar-a-Lago resort in Florida will be whether he makes good on his threat to use US-China trade ties to pressure Beijing to do more to rein in its nuclear-armed neighbour North Korea.

Spot gold hit $1,261.15 on Tuesday, its highest since Feb. 27, but has failed to breach a key 200-day moving average of $1,258.

"It just hasn't shown any ability to break the 200-day moving average and clearly shows that the price action is not being driven in isolation but has been driven by the US dollar," said Jeffrey Halley, senior market analyst at OANDA.

"It is kind of looking like gold is running out of steam in the short term."

The dollar index, which measures the greenback against a basket of currencies, was slightly firmer.

Supporting gold was some safe haven interest on the back of a dip in stocks on Thursday, with risk appetite soured by signs the Federal Reserve might start paring asset holdings later this year just as the chance of early US fiscal stimulus seems to be evaporating.

Spot silver dropped 0.4 percent to $18.19 an ounce.

Platinum fell 1 percent to $943.60, while palladium gave up 0.3 percent to $803. It hit a more than two-year high of $815.70 in the prior session, surging nearly a fifth this year.

"Palladium has had quite a remarkable run and overall we're still positive since it has the strongest fundamentals of any of the precious metals. We're going to see another fairly sizeable deficit this year," Mitsubishi's Butler said.