Gold prices dip on profit-taking, firm U.S. dollar

By Chris Prentice and Eric Onstad

NEW YORK/LONDON (Reuters) - Gold edged lower on Thursday, pressured by a firmer dollar on the back of upbeat U.S. unemployment data and as some investors sold to redeem profits after bullion's recent advance.

Spot gold was down 0.24 percent at $1,251.76 ounce by 2:42 p.m. EDT (1836 GMT), retreating from an overnight peak of $1,258.96.

The most active U.S. gold futures for June delivery settled up $4.8, or 0.38 percent, at $1,253.30 per ounce after climbing as much as 1 percent to $1,260.90.

"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 dollar index extended gains after data showed new applications for U.S. unemployment benefits last week recorded their biggest drop in nearly two years. [DLR/]

Those claims, however, will have no bearing on March U.S. non-farm payrolls data on Friday, which analysts say could be key for short-term direction of the gold market.

"Now, we're just waiting for the next data point: the jobs number," said Phillip Streible, senior commodities broker for RJO Futures in Chicago. "Gold futures may get hit right out of the gate and try to find their way back to this key psychological level around $1,250 (per ounce)."

According to a Reuters survey of economists, non-farm payrolls likely increased by 180,000 jobs last month after rising 235,000 in February.

Investors were also cautious ahead of the meeting between U.S. 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 U.S.-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.

Spot silver dropped 0.44 percent to $18.19 an ounce.

Platinum was down 0.86 percent at $951.24, while palladium fell 0.38 percent to $801.97. 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.

(Additional reporting By Nallur Sethuraman in Bengaluru; editing by David Evans and Chizu Nomiyama)