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Gold edges higher in choppy trade as investors await U.S. economic data

Production of gold at Krastsvetmet precious metals plant in Krasnoyarsk

By Brijesh Patel

(Reuters) - Gold prices edged back up in a choppy session on Wednesday, as investors looked forward to more economic data to gauge the U.S. Federal Reserve's rate-hike strategy.

Spot gold was up 0.1% at $1,875.10 per ounce by 3:19 p.m. ET (2019 GMT). U.S. gold futures rose 0.3% to settle at $1,890.70.

"The main focal point here has been the shift in sentiment after the jobs report. There were high expectations that (Fed Chair) Jerome Powell would take advantage of the opportunity to jawbone the market down a bit, but he did not," said David Meger, director of metals trading at High Ridge Futures.

"We continue to see gold prices to be range bound here. There is some fairly strong support in the $1,850 to $1,870 range. We think dips are going to remain a buying opportunity in the short term."

Powell said on Tuesday interest rates might need to move higher than expected if the U.S. economy remained strong, but reiterated he felt a process of "disinflation" is underway.

New York Fed President John Williams said on Wednesday his expectations of future central bank rate cuts were driven mostly by a need to respond to the likelihood of lower levels of inflation in the future.

Gold is highly sensitive to rising U.S. interest rates, as these increase the opportunity cost of holding non-yielding bullion.

Following a robust U.S. jobs report, market participants now await January inflation numbers next week that could offer more cues on the Fed's rate-hike path.

"One factor that could well be keeping the gold price so supported is the strength of buying from central banks, including those in China, India and Turkey," Kinesis Money analyst Rupert Rowling said.

The dollar edged up, making gold less attractive for other currency holders and limiting gains. [USD/]

Spot silver rose 0.3% to $22.25, platinum slipped 0.1% to $972.00, and palladium dipped 0.1% to $1,643.37.

(Reporting by Brijesh Patel in Bengaluru; additional reporting by Bharat Govind Gautam; Editing by Shounak Dasgupta and Shailesh Kuber)