Aug 1 (Reuters) - Gold prices edged down on Thursday following an uptick in the U.S. dollar, after bullion hit a two-week high earlier in the session on expectations of September interest rate cuts and safe-haven demand, as focus shifted to U.S. non-farm payrolls data due this Friday.
Spot gold was down about 0.4% at $2,438.32 per ounce as of 1803 GMT, having hit its highest since July 18 earlier in the session.
U.S. gold futures settled 0.3% higher at $2,480.8.
The dollar rallied to 0.3% after falling the previous day as central banks continued to roil currency markets.
While the U.S. Federal Reserve held interest rates steady at its policy meeting on Wednesday, Chair Jerome Powell said interest rates could be cut as soon as September if the U.S. economy follows its expected path.
"The market is fully of the view that we will get a cut in September and there are people in the market who are discussing the possibility of 50 basis points cut from the Federal Reserve," said Bart Melek, head of commodity strategies at TD Securities.
Bullion, traditionally known as a favoured hedge against geopolitical and economic risks, tends to thrive in a low-interest-rate environment.
Traders now await Friday's U.S. payrolls report for more cues on the Fed's policy path.
At the same time, central bank buying and physical demand in Asia are still subdued, "so right now the gold market is not running on all cylinders but at some point, we suspect that it will," Melek added.
"Central bank gold demand should stay high in 2024/2025 despite the recent absence of 'reported' PBOC gold purchases in May and June," analysts at Citi wrote in a note.
China's central bank, the largest official sector buyer of gold in 2023, refrained from gold purchases to its reserves for a second consecutive month in June.
Spot silver fell 2.4% to $28.33, platinum lost 1.3% to $963.05, palladium dropped 2.2% to $904.71.
Reporting by Rahul Paswan in Bengaluru; Editing by Vijay Kishore and Alan Barona
