LONDON (Reuters) - Gold prices dipped on Friday as investors expect U.S. President-elect Donald Trump to calm markets with a return to conciliatory language in his inaugural address.
If Trump repeats the reassuring tone taken immediately after the election in November there will be scant need for gold's safe haven attributes, analysts said.
"On the whole, we'd expect an appropriately presidential tone to be struck and that the dollar will gain and that bullion will once again be under pressure along with the rest of the precious metals complex," said Jonathan Butler, commodities analyst at Mitsubishi in London.
"However, if we get any of the campaign trail divisive rhetoric, that's probably going to sink that reflationary trade and boost gold as a safe haven."
Trump is due to take the oath of office at 1700 GMT, after the close of European markets.
Spot gold was down 0.4 percent at $1,200.11 an ounce by 1438 GMT, while U.S. gold futures fell 0.1 percent to $1,200.
Also weighing on gold was a slightly firmer dollar, which makes the metal more expensive for holders of other currencies.
The dollar index, which measures the greenback against a basket of currencies, added 0.1 percent to 101.25.
Better than expected U.S. jobs, housing and factory data reinforced the view that the U.S. economy is sufficiently robust to warrant interest rate rises.
Philadephia Federal Reserve President Patrick Harker said on Friday he expected three interest rate increases in 2017 if the labor market improves further and inflation moves to the Federal Reserve's 2 percent goal.
Gold is highly sensitive to rising rates, which lift the opportunity cost of holding non-yielding assets such as bullion while boosting the dollar, in which it is priced.
The metal has risen more than 7 percent since dropping to its lowest in more than 10-1/2 months in December, though it has failed to break above a key level in recent days.
"Gold has dropped back from quite a significant technical level around $1,220, a critical retracement of last year's high to low move. I would say from here the risks are skewed to the downside in the short term," Mitsubishi's Butler said.
In other precious metals, silver shed 0.6 percent to $16.91 an ounce.
Platinum rose 0.5 percent to $962.30 after touching a low of $943.75 in the previous session, its worst since Jan. 5.
The decline in diesel vehicles in Europe is a threat to platinium prices, Macquarie said in a note.
"In 2017, if the European (auto) market grows at the 2-3 percent rate our research group expects, a similar market share decline for diesel will mean falling sales and a hit to platinum demand of something like 35,000 oz."
Palladium gained 0.9 percent to $760.
(Additional reporting by Nallur Sethuraman in Bengaluru; Editing by David Goodman and David Evans)