Gold inches up on weaker dollar ahead of U.S. jobs data

By Clara Denina

LONDON (Reuters) - Gold edged higher on Friday on a lower dollar as investors waited for clues on the Federal Reserve's next policy move from a pivotal monthly U.S. labour report due later in the day.

Spot gold was up 0.1 percent at $1,361.77 an ounce by 1143 GMT. It has risen about 1 percent so far this week, boosted by a weaker dollar after the Fed gave no hints of any near-term interest rate rise at its monthly policy meeting last week.

Gold is highly sensitive to rising U.S. interest rates, as the opportunity cost of holding the non-yielding asset increases while boosting the dollar, in which it is priced.

"The Fed will be possibly waiting for a couple of nonfarm payrolls releases before deciding on rates," Natixis analyst Bernard Dahdah said.

"There is no reason for gold to fall below the $1,300 level in the short term, especially if European economy deteriorates, but prices could come off in the third quarter in anticipation of a Fed rate cut in December."

Economists polled by Reuters are looking for U.S. nonfarm employment to have risen by 180,000 in July. The numbers are due at 1230 GMT on Friday.

Data this week showed that U.S. private employers added 179,000 jobs in July, above economists' expectations, while the number of Americans filing for unemployment benefits unexpectedly rose last week.

The dollar was down 0.2 percent against a basket of six major currencies. European shares rose following global stock markets after the Bank of England cut interest rates to next to nothing on Thursday and unleashed billions of pounds of stimulus to cushion the economic shock from Britain's vote to leave the European Union.

"There's a lot of money in the market (after BoE easing). So, the downside for the gold price is limited and it'll be higher in the next few months," a Tokyo-based gold trader said.

Physical gold sales remained sluggish in Asia this week as higher prices kept buyers at bay, but appetite is expected to pick up with festive seasons approaching in top markets India and China.

Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, rose 0.37 percent to 973.21 tonnes on Thursday. [GOL/ETF]

Among other precious metals, spot palladium was down 0.2 percent at $702.30 an ounce. The metal, used in autocatalysts and as an investment, was heading for its first weekly loss after six weeks of gains.

Spot platinum was down 0.4 percent at $1,159.70, after touching its highest since April 2015 at $1,177.40 on Tuesday, while spot silver was unchanged at $20.28 an ounce.

(Additional reporting by Nallur Sethuraman and Koustav Samanta in Bengaluru; Editing by Ruth Pitchford)