* Headed for weekly drop of 1 pct
* Dollar holds gains, weighing on gold
* Coming up: U.S. non-farm payrolls, unemployment rate at
1230 GMT
(Updates prices)
By A. Ananthalakshmi
SINGAPORE, May 6 (Reuters) - Gold was set to post its
biggest weekly decline in six weeks on Friday as the U.S. dollar
firmed ahead of the U.S. non-farm payrolls report that could
provide clues about the Federal Reserve's monetary policy.
A strong payrolls number could prompt the Fed to raise rates
sooner than later, hurting non-interest paying gold. The metal
has rallied nearly 21 percent this year on expectations that the
Fed will slow the pace of rate hikes.
Economists polled by Reuters forecast U.S. employers likely
added 202,000 workers in April following a 215,000 increase in
March, with the jobless rate holding at 5 percent.
Spot gold XAU= was little changed at $1,278.63 an ounce by
0700 GMT. The metal has closed lower every session this week
despite hitting a 15-month top of $1,303.60 on Monday.
For the week, gold was set for a 1 percent decline, its
biggest weekly drop since the week ended March 25.
"If the jobs data is bad, gold will go up... But there is
one more set of jobs data before the next Fed meeting in June,"
said Helen Lau, an analyst at Argonaut Securities in Hong Kong.
"Gold's outlook will be very data dependent. Right now, it
is the currency trade and hawkish comments from Fed officials
that are weighing on it," she said.
The dollar hit a one-week high against a basket of major
currencies on Thursday after sliding to a 15-month low this week
as traders closed out profitable bets against the greenback
before the payrolls report. USD/
The Fed raised rates for the first time in a decade in
December from near zero but has since stood pat, in part because
of global economic uncertainty.
Gold is sensitive to interest rates as rising rates lift the
opportunity cost of holding non-yielding bullion.
St. Louis Fed President James Bullard said on Thursday the
Fed could raise rates at its meeting next month if the economic
data calls for it, despite the fact that traders see only a slim
chance of it happening.
Atlanta Fed President Dennis Lockhart said he was as yet
undecided about backing a rate rise next month even though he
expects the economy to rebound from a weak first quarter of
growth.
Investor sentiment toward gold appeared to be bullish with
assets of SPDR Gold Trust, the world's largest gold-backed
exchange-traded fund, rising to 829.44 tonnes on Thursday to the
highest in over two years. GOL/ETF
Among other precious metals, silver XAG= was poised for a
near 3 percent weekly loss, after four weeks of gains. Platinum
XPT= was down 1 percent on the week, snapping a five-week
winning streak, while palladium XPD= was set to post a near 4
percent loss for the week.
PRICES AT 0700 GMT
Metal Last Change Pct chg
Spot gold 1278.63 0.97 0.08
Spot silver 17.312 -0.014 -0.08
Spot platinum 1058.99 1.25 0.12
Spot palladium 601.25 4.2 0.7
Comex gold 1281.2 8.9 0.7
Comex silver 17.345 0.018 0.1
COMEX gold and silver contracts show the most
active months