Gold dips on outlook for U.S. rate hikes

(Reuters) - Gold prices inched down early on Thursday after the U.S. Federal Reserve left interest rates unchanged but hinted at hikes later this year.

FUNDAMENTALS

* Spot gold was down 0.2 percent at $1,342.70 per ounce at 0112 GMT.

* U.S. gold futures were up 0.3 percent at $1,342.90 per ounce.

* Gold prices rose over 3 percent in January, their best month since August, largely due to weakness in the dollar.

* The dollar index , which measures the greenback against a basket of currencies was steady at 89.139. [FRX/]

* At Fed Chair Janet Yellen's last policy meeting as head of the central bank, the Fed left interest rates unchanged. But its message on inflation signalled it was on track to raise borrowing costs in March under incoming chief Jerome Powell. [nTLAVCEE14]

* 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.

* The Bank of Japan on Wednesday increased its buying of medium-term Japanese government bonds in a move seen as a warning shot against further rises in bond yields. [nL4N1PQ1FG]

* Traders will now be looking ahead to the U.S. government's jobs report on Friday that will include data on nonfarm payrolls and average hourly earnings.

* The ADP Research Institute said on Wednesday that U.S. private employers added 234,000 workers in January, more than the 185,000 forecast among analysts polled by Reuters. [nZON1Y7W00] [nL2N1PP29E]

* SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, said its holdings fell 0.49 percent to 841.35 tonnes on Wednesday from 845.49 tonnes on Tuesday. [nEMN55WFJZ]

* January sales of U.S. Mint American Eagle gold coins fell 50 percent from the same month a year earlier, the slowest January sales in 10 years, and January silver coin sales fell to the lowest since 2009, government data showed on Wednesday. [nL2N1PQ85E]

* U.S. President Donald Trump's decision to withdraw federal protections from millions of acres of Utah wilderness will reopen much of the iconic terrain to gold, silver, copper, and uranium land claims under a Wild West-era mining law, according to federal officials. [nL2N1PQ81I]

* The U.S. Treasury said on Wednesday it planned to hold larger debt auctions because of the winding down of the Federal Reserve's bond-buying programme, but warned it would only be able to pay all of the federal government's bills through February. [nL2N1PQ6W3]

DATA AHEAD (GMT)

0145 China Caixin manufacturing PMI final Jan

0850 France Markit manufacturing PMI Jan

0855 Germany Markit/BME manufacturing PMI Jan

0900 Euro zone Markit manufacturing PMI final Jan

1330 U.S. Weekly jobless claims

1500 U.S. ISM manufacturing PMI Jan

1500 U.S. Construction spending Dec

(Reporting by Nallur Sethuraman in Bengaluru; Editing by Joseph Radford)