Gold edges higher on soft dollar

LONDON, June 06 (Reuters): Gold edged higher on Wednesday, propped up by a weaker dollar, but it was unlikely to make a significant move before an expected US rate hike next week and amid trade tensions.

Spot gold was up 0.1 per cent at $1,296.96 per ounce at 0900 GMT while US gold futures for August delivery dipped 0.1 per cent to $1,300.90 per ounce.

"Investors are sitting on the fence, they only want to be involved when we break out of the range," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

Gold was trapped between the 200-day moving average at around $1,308 and $1,286 on the downside, he added.

The case for hiking US interest rates next week was bolstered on Tuesday when data showed US services sector activity accelerated in May and job openings rose to a record high in April.

Gold, which is a non-interest-paying asset, could see demand take a hit from higher rates.

Once the rate decision has been taken, gold is likely to move higher, Hansen said.

"There is potential for gold to follow the same pattern it's taken after recent rate hikes: defensive before, only to rally afterwards."