- U.S. Q4 GDP growth estimates due on Thursday
- Weak economic data to help gold climb above $1,960 - analyst
- India gold prices hit record high
Jan 24 (Reuters) - Gold prices edged higher on Tuesday as the dollar weakened, with bullion's near-term trajectory likely hinging on U.S. economic data due this week that could influence the Federal Reserve's interest rate strategy.
Spot gold was up 0.2% at $1,935.04 per ounce, as of 0606 GMT. U.S. gold futures gained 0.4% at $1,935.60.
Key hubs such as China and Hong Kong remain closed for the Lunar New Year holidays.
The dollar index dipped 0.2%, making greenback-priced bullion more affordable for many buyers.
Investors awaited the U.S. fourth-quarter GDP growth estimates due on Thursday.
"Any signs of a weaker U.S. economy will be taken as a reason for the Fed to tighten less aggressively, and that could support gold, which would also take in safe haven flows," said Matt Simpson, a senior market analyst at City Index.
"Disappointing numbers likely to help gold climb above $1,960, but might not break through $2,000 in its first attempt, given the significance of the number."
Traders are mostly pricing in a 25-basis-point (bp) rate hike by the Fed at its Jan. 31-Feb. 1 policy meeting, after slowing its pace to 50 bps in December, following four straight 75-bp hikes. FEDWATCH
Lower interest rates tend to be beneficial for bullion, decreasing the opportunity cost of holding the non-yielding asset.
On the physical front, India is expected to slash import duty on gold, which could lift retail sales ahead of peak demand season in the world's second-biggest bullion consumer.
Indian gold futures hit an all-time high on Tuesday, tracking gains in overseas markets and a depreciation in the rupee, but the surge dampened demand in the world's second-biggest consumer of the precious metal, dealers said. read more
Spot silver gained 0.3% to $23.52 per ounce.
With the Chinese economy reopening and less disruption from COVID-19, it could support a consecutive year of record photovoltaic silver demand, analysts at Heraeus Precious Metals said in a note.
Platinum rose 0.8% at $1,055.25 and palladium advanced 0.5% to $1,712.57.