* Gold ticks up after dropping 1.4 pct on Thursday
* Expectations of higher U.S. interest rates cap gains
(Updates prices)
By Naveen Thukral
SINGAPORE, Jan 15 (Reuters) - Gold edged higher on Friday,
after dropping for the past four out of five sessions, as
falling Asian stock markets underpinned the precious metal
although gains were capped by expectations of another U.S.
interest rate increase.
Asian stocks slumped to 3-1/2-year lows as brief gains
earlier in the session gave way to renewed pressure on oil
prices and disappointing Chinese data, ratcheting up investor
concerns about the global economy. MKTS/GLOB
Spot gold XAU= added 0.6 percent to $1,083.76 an ounce by
0708 GMT, while U.S. gold futures GCcv1 gained nearly 1
percent to $1,083.9. Spot gold is down 1.86 percent this week,
most since the week ending Nov. 6.
"Many people do not expect the Fed to raise interest rates
further in January but there is talk of rates going higher in
the future which will keep gold prices capped," said Shandong
Gold Group chief analyst Shu Jiang.
The metal hit a two-month high at $1,112 last week as
volatility in Chinese stocks hit appetite for risk, but trading
has since fallen as expectations of further U.S. interest rate
increases lowers demand for the non-interest-paying asset.
The Fed raised rates in December and attention has shifted
to how many hikes will follow in 2016.
St. Louis Federal Reserve President James Bullard said a
continued decline in inflation expectations may change his
outlook for further Fed rate hikes, though so far he feels the
United States continues on a healthy track.
Bullard's comments followed those by Chicago Fed President
Charles Evans on Wednesday, when he said he was nervous about
the potential effects of China's slowdown on the U.S. economy
and about the possibility that inflation expectations may be
slipping.
The world's largest gold-backed exchange-traded fund, New
York-listed SPDR Gold Shares (N:GLD), reported a 2.4 tonne rise in its
holdings on Wednesday, bringing its total inflow for the year to
11.7 tonnes.
Silver XAG= is down about half a percent this week after
gaining 1 percent last week, palladium XPD= down 1.3 percent
after sliding 12 percent last week and platinum XPT= is down
almost 5 percent in its second week of decline.