Gold prices inched down early on Thursday after the US Federal Reserve left interest rates unchanged but hinted at hikes later this year.
Spot gold was down 0.2 per cent at $1,342.70 per ounce at 0112 GMT. US gold futures were up 0.3 per cent at $1,342.90 per ounce.
Gold prices rose over 3 per cent in January, their best month since August, largely due to weakness in the dollar. The dollar index, which measures the greenback against a basket of currencies was steady at 89.139.
At Fed Chair Janet Yellen's last policy meeting as head of the central bank, the Fed left interest rates unchanged. But its message on inflation signalled it was on track to raise the borrowing costs in March under incoming chief Jerome Powell.
Inflation worries generally boost gold, which is seen as a safe-haven against rising prices. But expectations that the Fed will raise interest rates to fight inflation make gold less attractive because it does not pay interest.
The Bank of Japan had on Wednesday increased its buying of medium-term Japanese government bonds in a move seen as a warning shot against further rises in bond yields.
Traders will now be looking ahead to the US government's jobs report on Friday that will include data on non-farm payrolls and average hourly earnings.
The ADP Research Institute had said on Wednesday that US private employers added 234,000 workers in January, more than the 185,000 forecast among analysts polled by Reuters.
SPDR Gold Trust
SPDR Gold Trust , the world's largest gold-backed exchange-traded fund, said its holdings fell 0.49 per cent to 841.35 tonnes on Wednesday from 845.49 tonnes on Tuesday.
January sales of US Mint American Eagle gold coins fell 50 percent from the same month a year earlier, the slowest January sales in 10 years, and January silver coin sales fell to the lowest since 2009, government data showed on Wednesday.
US President Donald Trumps decision to withdraw federal protections from millions of acres of Utah wilderness will reopen much of the iconic terrain to gold, silver, copper, and uranium land claims under a Wild West-era mining law, according to federal officials.
The US Treasury had said on Wednesday it planned to hold larger debt auctions because of the winding down of the Federal Reserve's bond-buying programme, but warned it would only be able to pay all of the federal government's bills through February.