SINGAPORE, Nov 6 (Reuters) - Gold languished near an
eight-week low on Friday and was set to post its worst weekly
drop in eight months as investors positioned themselves for a
possible U.S. rate hike this year, pulling money out of bullion
funds.
Focus will be on the U.S. nonfarm payrolls report due later
in the day as markets look to gauge the strength of the economy
and how it would affect the Federal Reserve's monetary policy.
FUNDAMENTALS
* Spot gold XAU= had ticked up 0.2 percent to $1,106.05 an
ounce by 0033 GMT, but was close to $1,102.35 hit in the
previous session, the lowest since Sept. 11.
* The metal has lost 3.2 percent for the week, the sharpest
slide since the week ended March 6.
* Fed Chair Janet Yellen said on Wednesday that a rise in
rates in December was a "live possibility" if justified by
upcoming economic data. William Dudley, president of the New
York Fed, later on Wednesday agreed with her comments.
* After the U.S. central bank's September meeting, investors
believed the Fed would delay the first U.S. rate hike in nearly
a decade to next year on global growth concerns. But in October,
the Fed made a direct reference to its next policy meeting in
December as a possibility for a rate increase.
* The Fed in its last policy statement was deliberately
trying to convince investors of a possible December interest
rate hike, and was successful in doing so, Atlanta Fed President
Dennis Lockhart said on Thursday.
* Gold as a non-interest-paying asset could see demand take
a hit from higher rates.
* Assets in SPDR Gold Trust GLD , the top gold-backed
exchange-traded fund, tumbled to 671.77 tonnes on Thursday, the
lowest since mid-August.
* On Thursday alone, the fund saw outflows of 8.34 tonnes,
the biggest daily drop since July 17.
* Solid payrolls data later in the session could seal the
case for a December rate hike. According to a survey of
economists, nonfarm payrolls probably increased 180,000, well
above the 139,000 jobs per month average for August and
September.
* Silver XAG= and platinum XPT= were headed for their
third straight weekly declines. With a 10-percent slide,
palladium XPD= was on track for its worst week since September
2011.
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MARKET NEWS
* The dollar held firm on Friday with investors on
tenterhooks to see whether the upcoming U.S. job data will be
strong enough to cement rising expectations of a Fed interest
rate hike next month. USD/
DATA AHEAD (GMT)
0700 Germany Industrial output Sep
0745 France Trade data Sep
1330 U.S. Nonfarm payrolls Oct
1330 U.S. Unemployment rate Oct
2000 U.S. Consumer credit Sep
PRICES AT 0033 GMT
Metal Last Change Pct chg
Spot gold 1106.05 2.5 0.23
Spot silver 14.98 0.02 0.13
Spot platinum 949.5 3.51 0.37
Spot palladium 605.25 1.5 0.25
Comex gold 1105.7 1.5 0.14
Comex silver 14.975 -0.008 -0.05
COMEX gold and silver contracts show the
most active months