Gold heads for first weekly fall in four as rate-cut hopes fade

Gold prices were on track for their first weekly fall in four on Friday, as waning expectations of an early interest rate cut in the U.S. boosted the dollar, while investors focussed on a key employment report due later in the day for more rate clues.

FUNDAMENTALS

* Spot gold was up 0.1% at $2,054.10 per ounce, as of 0156 GMT. It has declined about 0.8% so far in the week after three straight weekly gains.

* U.S. gold futures rose 0.2% to $2,053.00 per ounce.

* The dollar index was headed for its best week since July 2023, making bullion more expensive for other currency holders. * Pointing to persistent strength in the U.S. labour market, data on Thursday showed that weekly jobless claims fell more than expected last week and private employers hired more workers than expected in December.

* Federal Reserve officials were convinced that inflation was coming under control but noted an elevated degree of uncertainty about the rate cut outlook, minutes of the Fed's Dec. 12-13 meeting released on Wednesday showed.

* Lower interest rates decrease the opportunity cost of holding non-yielding bullion.

* Market participants have tempered their expectations of monetary policy easing by the Fed, pricing in about a 65% chance of a rate cut by March, compared with a 90% chance a week ago, according to the CME FedWatch tool.

* Investors now await the U.S. non-farm payrolls report due at 1330 GMT for further direction.

* Spot silver rose 0.6% to $23.13 per ounce, while platinum slipped 0.3% to $953.61.

* Palladium rose 0.7% to $1,044.23 after an eight-session slide.