By Eric Onstad
LONDON (Reuters) - Gold slipped on Thursday as the dollar strengthened after upbeat U.S. data and on scepticism over whether OPEC members would be able to implement production cuts that could fuel inflation.
The dollar index, which measures the greenback against a basket of currencies, rose to a session high after stronger than expected data on U.S. second-quarter economic growth and weekly jobless claims.
The positive data increases the chances of a U.S. interest rate hike and gold is highly sensitive to rising rates, as these increase the opportunity cost of holding non-yielding bullion.
Spot gold was down 0.4 percent to $1,316.35 an ounce by 1253 GMT, having touched an overnight high of $1,325.80.
U.S. gold futures were down 0.3 percent at $1,320.30.
Gold was also pressured in the aftermath of a decision by the OPEC on Wednesday to make modest output cuts in the first such deal since 2008.
The news gave oil an initial boost, only for the price to slip as investors questioned whether the deal would be enough to rebalance a heavily oversupplied market. [O/R].
"If OPEC ends up achieving its objective, it could significantly change the outlook for global inflation and the need to have a hedge (potentially through gold) against higher inflation," said Danske Bank senior analyst Jens Pedersen.
Though the agreed OPEC cuts are relatively small, Pedersen said he considered them to be on the ambitious side.
"It will be a difficult task," he said. "Over the next couple of days, the gold market will keep an eye on this, but I doubt that we will get any significant details before the next OPEC meeting in November."
Division between Federal Reserve policymakers on when to raise U.S. interest rates has sapped investor enthusiasm for trading on comments by officials from the central bank.
"The gold and dollar markets are currently without very strong direction. The mixed views from U.S. Fed officials have weakened their credibility and the market has stopped buying (on) their comments," said Jiang Shu, chief analyst at Shandong Gold Group.
"With some time still to pass until the expected U.S. Federal Reserve rate rise in December, gold looks likely to hold range-bound over the short term," said MKS PAMP Group trader Sam Laughlin.
Silver fell 0.7 percent to $19.04 an ounce, while platinum fell 0.4 percent to $1,021.60 and palladium slipped 0.1 percent to and $708.35. Palladium earlier touched its highest in more than seven weeks at $721.30.
(Additional reporting by Nallur Sethuraman in Bengaluru; Editing by David Goodman and David Evans)
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