Spot gold was 0.2% lower at $1,774.96 per ounce, while U.S. gold futures dropped 0.4% to $1,776.10
Gold was subdued on Thursday, as a stronger dollar made bullion more expensive for holders of other currencies, amid mixed signals from U.S. Federal Reserve on rate hike. Investors also awaited more U.S. data to gauge inflationary pressures.
Spot gold was 0.2% lower at $1,774.96 per ounce at 0251 GMT. U.S. gold futures dropped 0.4% to $1,776.10.
The dollar index held firm below an 11-week high against its rivals.
With a lack of clear direction and contradictory themes coming from Fed officials and the news headlines, expect gold to continue its choppy range-bound trading, Jeffrey Halley, a senior market analyst at OANDA said.
The market remains nervous about earlier lift-off entrenched inflation type headlines and so gold will remain a sell on rallies into the end of the week, he said.
Two Fed officials on Wednesday said that a period of high inflation in the United States may last longer than anticipated, a day after Fed Chair Jerome Powell downplayed inflation worries and signalled interest rates would not be hiked too quickly.
However, Atlanta Fed President Raphael Bostic expects interest rates will need to rise in late 2022 as inflation is well above Fed’s 2% target.
Gold is often seen as a hedge against inflation, but the opportunity cost of holding bullion will rise and dull its appeal after a rate hike by the Fed.
Investors have now shifted their focus to U.S. producer price inflation data due on Friday, as well as jobless claims expected later in the day. U.S. non-farm payrolls are due next week.
Spot gold is biased to downside and may test a support at $1,769 per ounce, a break below which could open the way towards the range of $1,734-$1,744 range, according to Reuters technical analyst Wang Tao.
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