[SINGAPORE] Gold was set to post its biggest weekly decline in six weeks on Friday as the US dollar firmed ahead of the US 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 per cent this year on expectations that the Fed will slow the pace of rate hikes.
Economists polled by Reuters forecast US employers likely added 202,000 workers in April following a 215,000 increase in March, with the jobless rate holding at 5 per cent.
Spot gold was little changed at US$1,278.63 an ounce by 0700 GMT. The metal has closed lower every session this week despite hitting a 15-month top of US$1,303.60 on Monday.
For the week, gold was set for a one per cent 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 US 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.
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.
Among other precious metals, silver was poised for a near 3 per cent weekly loss, after four weeks of gains. Platinum was down one per cent on the week, snapping a five-week winning streak, while palladium was set to post a near 4 per cent loss for the week.