* 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. 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. 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.