Gold prices edged down on Friday ahead of US jobs data later in the day, with traders looking for any implications for the outlook for US monetary policy over the rest of the year.

Spot gold had dipped 0.1 per cent to $1,347.40 per ounce by 0326 GMT. It has also fallen 0.1 per cent so far this week. US gold futures were up 0.2 per cent at $1,351 per ounce.

Traders are looking to the US government's jobs report on Friday. Non-farm payrolls probably rose 180,000 jobs in January after increasing 148,000 in December, according to a Reuters survey of economists.

US jobs data

The unemployment rate is forecast to be unchanged at a 17-year low of 4.1 per cent. Stronger-than-expected jobs data, lower unemployment and higher wages would signal strength in the economy, and could in turn strengthen the dollar and pressure gold, analysts say.

“Considering the tightening monetary policy in the US, rising US Treasury bond yields and record-setting equity markets, gold prices have done well to climb and even better to forge ahead,” ScotiaMocatta analysts said in a note.

“Funds have been buying gold, while short interest remains low ... The gold chart continues to look bullish with prices well placed to break out of a multi-year base.”

The US Federal Reserve held interest rates unchanged on Wednesday but raised its inflation outlook and flagged “further gradual” rate increases. “The rate hikes seem to be doing little to dampen the relative resilience on display in gold,” said INTL FCStone analyst Edward Meir.

Spot gold is expected to rise to $1,357 per ounce, as it has broken above resistance at $1,347, according to Reuters technical analyst Wang Tao. The dollar nursed losses against a basket of currencies on Friday and was on track for a weekly fall as investors focused on renewed economic strength in the eurozone.

“As gold prices rallied in a risk-on environment with a weaker US dollar, a risk-off environment will probably result in a dollar recovery and lower gold prices,” said ABN Amro analyst Georgette Boele. “We think that gold prices are toppish at current levels and we expect prices to move below $1,300 in the coming weeks.”

Silver fell 0.1 per cent to $17.22 an ounce. Platinum dropped 0.4 per cent to $1,002, while palladium was down 0.1 per cent at $1,036.20. Palladium fell to its lowest since December 18 at $1,013.72 on Thursday and is on track to its worst weekly fall since the week-ending May 19, 2017.

Prices are down over 5 per cent this week and have fallen $124 since touching a record high at $1,138 on January 15.